area handbook series 

Hungary 

a country study 




Hungary 

a country study 

Federal Research Division 
Library of Congress 
Edited by 
Stephen R. Burant 
Research Completed 
September 1989 



On the cover: Esztergom, 1916 



Second Edition, 1990; First Printing, 1990. 

Library of Congress Cataloging-in-Publication Data 

Hungary: A Country Study. 

Area Handbook Series, DA Pam 550-165 
"Research completed September 1989." 
Bibliography: pp. 275-301. 
Includes index. 

Supt. of Docs. no. : D 101.22:550-165/991 

1. Hungary I. Burant, Stephen R., 1954- . II. Keefe, Eugene 
K. Area Handbook for Hungary. III. Library of Congress. Federal 
Research Division. IV. Series. V. Series: Area Handbook Series: 
DA Pam 550-165. 

DB906.H86 1990 943.9— dc20 90-6426 CIP 



Headquarters, Department of the Army 
DA Pam 550-165 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 



Foreword 



This volume is one in a continuing series of books now being 
prepared by the Federal Research Division of the Library of Con- 
gress under the Country Studies — Area Handbook Program. The 
last page of this book lists the other published studies. 

Most books in the series deal with a particular foreign country, 
describing and analyzing its political, economic, social, and national 
security systems and institutions, and examining the interrelation- 
ships of those systems and the ways they are shaped by cultural 
factors. Each study is written by a multidisciplinary team of social 
scientists. The authors seek to provide a basic understanding of 
the observed society, striving for a dynamic rather than a static 
portrayal. Particular attention is devoted to the people who make 
up the society, their origins, dominant beliefs and values, their com- 
mon interests and the issues on which they are divided, the nature 
and extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should not 
be construed as an expression of an official United States govern- 
ment position, policy, or decision. The authors have sought to 
adhere to accepted standards of scholarly objectivity. Corrections, 
additions, and suggestions for changes from readers will be wel- 
comed for use in future editions. 

Louis R. Mortimer 
Acting Chief 

Federal Research Division 
Library of Congress 
Washington, D.C. 20540 



111 



Acknowledgments 



The authors wish to express their appreciation to a number of 
people who assisted in the preparation of this study. Paul Marer 
of Indiana University furnished his considerable expertise on the 
Hungarian economy. Thanks go to Sharon Schwartz, who edited 
the chapters, and to Cissie Coy, who performed the final pre- 
publication review. The index was prepared by Shirley Kessell. 
Malinda B. Neale of the Library of Congress Composing Unit pre- 
pared the camera- ready copy under the supervision of Peggy Pixley. 

A number of members of the Federal Research Division of the 
Library of Congress made significant contributions to the prepa- 
ration of this book. Special thanks are owed to Richard F. Nyrop, 
who supplied help and suggestions on chapters 1 through 4, and 
to Sandra W. Meditz, who reviewed Chapter 5. The authors are 
also grateful to Raymond E. Zickel, who assisted in research and 
writing. Martha E. Hopkins ably oversaw editing, and Marilyn 
Majeska managed production of the book. Elizabeth A. Yates, 
Barbara Edgerton, and Izella Watson assisted in numerous phases 
of manuscript preparation. Helen Fedor gathered and helped select 
the photographs, and Walter R. Iwaskiw assembled the materials 
for the maps. Invaluable graphics support was given by David P. 
Cabitto, assisted by Sandra K. Ferrell (who did the cover and chap- 
ter illustrations) and Kimberly A. Lord. Stanley M. Sciora fur- 
nished information on the ranks and insignia of the Hungarian 
armed forces. 

Finally, the authors wish to note the generosity of those individ- 
uals who provided photographs for this book. All photographs are 
original work not previously published. 



v 



Contents 



Page 

Foreword iii 

Acknowledgments v 

Preface xiii 

Country Profile xix 

Introduction xxvii 

Chapter 1. Historical Setting 1 

Charles Sudetic 

EARLY HISTORY 3 

MEDIEVAL PERIOD 5 

Christianization of the Magyars 5 

Stephen I 6 

Politics and Society under Stephen's Successors 8 

Reconstruction 9 

RENAISSANCE AND REFORMATION 11 

Golden Era 11 

Reign of Ulaszlo II and Louis II 14 

Partition of Hungary 16 

End of the Partition 19 

HUNGARY UNDER THE HABSBURGS 19 

Reign of Leopold II 19 

Reign of Charles VI and Maria Theresa 20 

Enlightened Absolutism 22 

Economic and Social Developments 23 

The Revolution of March 1848 26 

Aftermath of the Revolution 27 

DUAL MONARCHY 28 

Constitutional and Legal Framework 28 

Rise of the Liberal Party 29 

Social Changes 31 

Political and Economic Life, 1905-19 34 

TRIANON HUNGARY 37 

Postwar Political and Economic Conditions 37 

Bethlen Government 38 

Economic Development 39 

The Great Depression 41 

Radical Right in Power 42 



vii 



World War II 44 

POSTWAR HUNGARY 46 

Coalition Government and Communist Takeover .... 46 

Rakosi's Rule 49 

Revolution of 1956 53 

Kadar's Reforms 54 

New Economic Mechanism 57 

Chapter 2. The Society and Its Environment . 63 

Becky Gates 

PHYSICAL ENVIRONMENT 67 

Topography 67 

Climate 71 

POPULATION 71 

Historical Trends 71 

Structure 72 

Settlement Patterns 73 

THE HUNGARIAN PEOPLE 74 

Origins and Language 75 

Minority Groups 76 

SOCIAL STRUCTURE 78 

Interwar Period 79 

Postwar Societal Transformation 80 

Social Relations in the 1980s 82 

SOCIAL INSTITUTIONS 86 

The Family 86 

Mass Organizations 88 

Religion and Religious Organizations 91 

EDUCATION 96 

HEALTH AND WELFARE 99 

Health 99 

Welfare 102 

Housing 103 

DISSENT AND FREEDOM OF EXPRESSION 104 

Chapter 3. The Economy 109 

Charles Sudetic 

RESOURCE BASE 112 

Energy Resources 112 

Mineral Resources 113 

Land, Climate, and Forests 113 

Environmental Problems 114 

LABOR FORCE 115 

Work Force 115 



viii 



Underemployment and Unemployment 116 

Labor Turnover 117 

Women in the Work Force and Foreign Workers .... 117 

ECONOMIC SYSTEM AND CONTROL MECHANISMS . . 118 

Role of Party and Government Bodies 118 

Ownership 119 

Planning 120 

Economic Regulators 121 

Finance 125 

Industrial Organization 129 

Agricultural Organization 131 

Private Activity 135 

Conflict-Resolution Mechanisms 135 

ECONOMIC SECTORS 136 

Industry 137 

Agriculture 142 

Construction 143 

Transportation and Telecommunications 143 

Private Sector 147 

The Third Economy 148 

FOREIGN TRADE 149 

Organization of Foreign Trade 150 

Cooperation Agreements and Joint Ventures 150 

Trade Volume and Structure 152 

Trade Partners 152 

DOMESTIC CONSUMPTION 155 

Domestic Trade Sector 155 

Standard of Living 156 

ECONOMIC POLICY AND PERFORMANCE, 1945-85 ... 157 

THE SEVENTH FIVE-YEAR PLAN, 1986-90 162 

Chapter 4. Government and Politics 167 

Stephen R. Bur ant 

CONSTITUTIONAL DEVELOPMENT 170 

Constitution of 1949 170 

Amendments of 1972 171 

Constitutional Law Council 173 

STATE APPARATUS 174 

Council of Ministers 177 

Presidential Council 178 

National Assembly 180 

Elections to the National Assembly 181 

County and District Government 185 

Judicial Organs 187 



ix 



HUNGARIAN SOCIALIST WORKERS' PARTY 188 

Ideology 189 

Democratic Centralism 191 

Party Structure 192 

Discipline 199 

Membership 200 

Social Composition of the Party 201 

Patriotic People's Front 202 

MASS MEDIA 203 

FOREIGN POLICY 205 

Principles of Foreign Policy 206 

Relations with the Soviet Union 208 

Relations with Other Communist Neighbors 210 

Relations with the West 215 

Relations with Selected Non- Western Countries 218 

Hungary and the Soviet Model 220 

Chapter 5. National Security 221 

Kenneth E. Nyirddy 

HISTORICAL AND POLITICAL SETTING 223 

Historical Background and Traditions 224 

The Postrevolutionary Period 233 

Government and Party Control 234 

Soviet Influence 237 

External Threats to National Security 239 

THE HUNGARIAN ARMED FORCES 241 

Ground Forces 241 

Air Force 244 

Manpower 245 

Conscientious Objection 245 

Education and Training 246 

Uniforms and Rank Insignia 251 

INTERNAL SECURITY AND PUBLIC ORDER 253 

National Police 253 

Security Police 255 

Border Guard 255 

Workers' Guard 257 

CRIMINAL JUSTICE SYSTEM 257 

Incidence of Crime 257 

Penal Code and Criminal Procedure 259 

Military Justice 259 

Penal System 260 

Reaction to Political Dissent 260 



x 



Appendix. Tables 265 

Bibliography 275 

Glossary 303 

Index 305 

List of Figures 

1 Administrative Divisions of Hungary, 1989 xxiv 

2 Hungary in A.D. 1200 10 

3 Hungary During the Period of Partition, 1541-1699 18 

4 The Dual Monarchy of Austria-Hungary, 1867-1918 30 

5 Trianon Hungary, 1920 40 

6 Topography and Drainage 70 

7 Transportation System, 1989 144 

8 Government System, 1986 176 

9 Organizational Structure of the Hungarian 

Socialist Workers' Party, 1988 190 

10 Structure of the County Committee Apparatus, 1986 200 

11 Military Ranks and Insignia, 1989 254 



xi 



Preface 



Since the mid-1970s, few countries in the world have experienced 
such rapid and extensive change as Hungary. The political sys- 
tem has moved from an authoritarian regime dominated by the 
Hungarian Socialist Workers' Party (HSWP) to a multiparty repub- 
lic. The HSWP itself split, in October 1989, and most of its lead- 
ers organized a new party, the Hungarian Socialist Party. In the 
late 1980s, relations with Western countries improved dramatically, 
and the Hungarians also received significant support for their re- 
form efforts from the Soviet Union. By contrast, until late 1989 
tensions between Hungary and Romania were rising over the lat- 
ter' s treatment of its Hungarian minority, but, after the Decem- 
ber 1989 revolution in Romania, the chances for the resolution of 
that problem improved. Although sporadic efforts had been under- 
taken since the late 1960s to introduce elements of a market econ- 
omy into a socialist command economy, Hungarian leaders in 1989 
declared their intention to create a full-fledged capitalist economy. 
The government has also reduced the defense budget, and it has 
taken steps to make the police apparatus accountable to the peo- 
ple and to their elected representatives. Yet, the discontent that 
emerged from pressures stemming from the economy's precipitous 
decline continued. This discontent, coupled with the regime's need 
to widen its support to sustain the transition from a state socialist 
to capitalist economy, led the Hungarian regime to undertake po- 
litical reform efforts. 

These changes have necessitated a new edition of Hungary: A 
Country Study, which supersedes the edition published in 1973. Vir- 
tually everything discussed in the previous edition has been over- 
taken by events. Like the earlier edition, this study attempts to 
present the dominant historical, social, economic, political, and 
national security aspects of Hungary. Sources of information in- 
cluded books and scholarly journals, official reports of governments 
and international organizations, foreign and domestic newspapers, 
and numerous periodicals. A brief annotated bibliographic note 
on sources recommended for further reading appears at the end 
of each chapter, and more detailed chapter bibliographies appear 
at the end of the book. Measurements are given in the metric sys- 
tem; a conversion table is provided to assist those readers who are 
unfamiliar with metric measurements (see table 1 , Appendix). A 
glossary is also provided. 



Xlll 



The Hungarian people are descendants of the Magyars, an 
Asiatic tribe whose origins lie in what is today central Russia. The 
word Hungary appears to derive from a Slavicized form of the Turkic 
words on ogur, meaning "ten arrows," which may have referred 
to the number of Magyar tribes. Unlike most Europeans, Hun- 
garians do not speak an Indo-European language. Hungarian is 
a member of the Finno-Ugric language family, which also includes 
such languages as Estonian and Finnish. 

The illustration on the cover and those that introduce each chap- 
ter merit a word of explanation. These drawings were adapted from 
Andre Kertesz's poignant photographs of his native land, which 
were published in Hungarian Memories: Nineteen Twelve to Nineteen 
Twenty -Five. 



xiv 



Table A. Chronology of Important Events 



Date 



Events 



EARLY HISTORY 
ca. A.D. 100-600 



Magyar tribes, a pagan Finno-Ugric people, 
begin migration from Urals south onto Rus- 
sian steppes and continue west, to area be- 
tween Don and lower Dnepr rivers, where 
they fall under the sway of the Bulgar-Turkish 
people. 



ca. A.D. 600-900 



MEDIEVAL PERIOD 
Arpad Dynasty 
ca. 900-1301 



RENAISSANCE AND 
REFORMATION 
1301-1699 



Magyars fall under the control of the Khazars 
but are later freed from Khazar rule in the 
ninth century. Magyars join Byzantine armies 
to fight the Bulgars in 895. Magyars migrate 
farther west into the Danube-Tisza Basin, 895 
or 896. Arpad is chosen as chieftain; his male 
descendants become hereditary heirs of this 
kingdom, which became known as Hungary. 

Magyars besiege Europe and the Byzantine Em- 
pire but are defeated by Moravian and Ger- 
man armies in 955. Chieftain Geza (972-97) 
is baptized into Roman Catholic Church. 
Geza's son, Stephen I (997-1038), is recog- 
nized by Pope Sylvester II as king of Hun- 
gary, ensuring independence from Byzantium 
and the Holy Roman Empire. Latin alphabet 
is devised for Hungarian language. Magyars 
occupy Transylvania. Laszlo I (1077-95) oc- 
cupies Slavonia in 1090, and Kalman I 
(1095-1 1 16) takes the title of king of Croatia 
in 1103. Under Bela 111 (1173-96), Hungary 
becomes one of the leading powers in south- 
eastern Europe. Nobles force Andrew II 
(1205-35) to sign Golden Bull (1222) limit- 
ing crown's power. Mongols rout Hungarian 
army at Mohi in 1241 . Mongols withdraw in 
1242. Arpad line expires in 1301. 

Charles Robert (1308-42) wins prolonged suc- 
cession struggle. Dynastic marriages link 
Hungary to Naples and Poland. Louis I 
(1343-82) reconfirms Golden Bull. First 
university is founded in 1367. Hungary's for- 
tunes begin to decline under Sigismund 
(1387-1437). Social turmoil erupts because of 
higher taxes and pressures from the magnates 
on the lesser nobles. Wars against Ottoman 
Turks are waged in reigns of Albrecht V 
(1437-39) and Ulaszlo I (1439-44). Janos 
Hunyadi rules Hungary as regent for infant 
king, Laszlo V. Hunyadi defeats the Turks 
in Transylvania in 1442 and in Serbia in 1443, 
is defeated at Varna in 1444, and defeats the 
Turks again in 1456 near Belgrade. Nobles 
crown Hunyadi's son Matyas Corvinus 
(1458-90) king. Matyas enacts numerous 



XV 



Table A. — Continued 



Date 



Events 



reforms. After the death of Matyas, an oligar- 
chy of magnates takes control, and the coun- 
try remains in a state of anarchy until 1526, 
when the Turks defeat Hungary at Mohacs. 
Hungary is partitioned between the Turks and 
the Habsburgs in 1541. Habsburgs invade 
Transylvania in 1591. Habsburgs rout a 
Turkish army in 1664 at St. Gotthard in Hun- 
gary. Hungarians rebel against Habsburg rule 
in 1681. Turks attack Habsburgs but are 
routed near Vienna in 1683. Western cam- 
paign drives Turks from Hungary, and Turks 
lose almost all Hungarian possessions in Peace 
of Karlowitz (1699), which ends partition. 



HUNGARY UNDER THE 
HABSBURGS 
1700-1867 



Vienna assumes control of Hungary's foreign 
affairs, defense, and tariffs, and it treats Tran- 
sylvania as separate from Hungary. Peasant 
rebellion in 1703 provokes an eight-year up- 
rising led by Ferenc Rakoczi against Habs- 
burg rule. Treaty of Szatmar (1711) ends 
rebellion. Under Pragmatic Sanction (1723), 
Habsburg monarch agrees to rule Hungary 
as a king subject to restraints of Hungary's 
constitution and laws. Under Charles VI 
(1 71 1-40) and Maria Theresa (1740-80), the 
economy declines. Joseph II (1780-90), an en- 
lightened despot, attempts various changes, 
but the nobles resist and thus inspire a renais- 
sance of Hungarian culture. Leopold I (1790- 
92) softens Habsburg policy. Under Francis 
I (1792-1835), Hungary stagnates. Toward 
the end of Francis's rule, liberal reformers 
Istvan Szechenyi and Lajos Kossuth emerge; 
they increasingly press their demands under 
Ferdinand V (1835-48). In March 1848, a 
revolution against the absolute monarchy 
breaks out in Vienna and quickly spreads to 
Budapest. The Hungarians declare indepen- 
dence in April 1849, but with the help of Rus- 
sian troops the Habsburgs reimpose control. 
Franz Joseph (1848-1916) revokes the Hun- 
garian constitution and assumes absolute 
power. Austria is defeated by Sardinia and 
France in 1859 and by Prussia in 1866, result- 
ing in the Compromise of 1867, which cre- 
ates the Dual Monarchy of Austria-Hungary, 
also known as the Austro-Hungarian Empire. 



DUAL MONARCHY 
1867-1918 



Under the Dual Monarchy, the Habsburg em- 
peror reigns as king of Hungary. A Hun- 
garian government administers domestic 
affairs, while Vienna manages foreign policy, 
defense, and finance. Croatia gains autonomy 



XVI 



Table A. — Continued 



Date 



Events 



from Hungary over its domestic affairs in 
1868. Kalman Tisza serves as prime minister 
1875-90. Economic modernization begins, ac- 
companied by rise of a middle class. Istvan 
Tisza serves as prime minister 1903-05 and 
1912-17. The June 28, 1914, assassination of 
Archduke Franz Ferdinand precipitates World 
War 1(1914-18). Bourgeois-democratic revo- 
lution in Budapest, October 31, 1918. Mihaly 
Karolyi, a liberal, assumes power. Hungary 
loses territory to Yugoslavia, Romania, Aus- 
tria, and Czechoslovakia. A coalition of So- 
cial Democrats and communists takes power. 
Hungarian Soviet Republic is proclaimed un- 
der Bela Kun, March 21, 1919. Romanian 
forces occupy Budapest. Anticommunist 
government seizes control and imposes "white 
terror." 



TRIANON HUNGARY 
1920-45 



Admiral Miklos Horthy is named regent of 
Hungary, March 21, 1920. Under Treaty of 
Trianon (June 4, 1920), Hungary loses more 
than two-thirds of its prewar territory, 60 per- 
cent of its prewar population, and most of its 
natural-resource base. Count Istvan Bethlen 
serves as prime minister, 1921-31. Hungary 
joins League of Nations in 1922. Bethlen pro- 
motes industrial development, but economic 
progress is halted by Great Depression, 1929. 
Gyula Gombos, a right-wing dictator, is in 
power, 1932-36. Gombos forges close ties with 
Germany and Italy. Right-wing governments 
are in power under Kalman Daranyi (1936- 
38) and Bela Imredy (1938-39). Pal Teleki 
serves as prime minister, 1939-41. Hungary 
joins Hitler's invasion of the Soviet Union in 
June 1941 and declares war against the 
Western Allies in December 1941. Laszlo 
Bardossy prime minister, 1941-42, followed 
by Miklos Kallay, 1942-43. Nazi Germany 
occupies Hungary in April 1943. Pro-Nazi 
Dome Sztqjay serves as prime minister, April 
1943- August 1944, followed by Geza Laka- 
tos, August-October 1944. Leader of fascist 
Arrow Cross Party, Ferenc Szalasi, serves as 
prime minister, October 1944- April 1945. 
Soviet troops drive all German troops out of 
Hungary by April 4, 1945. 



POSTWAR HUNGARY 
1945- 



Allied Control Commission, with Soviet, Ameri- 
can, and British representatives, holds sov- 
ereignty in Hungary, with Soviet chairman 
in absolute control. Second, expanded Provi- 
sional National Assembly chosen in which 



XVII 



Date 



Events 



communists enjoy absolute majority, April 
1945. Left-leaning coalition governments rule 
Hungary 1945-47. Treaty of Paris (February 
10, 1947) ended World War II for Hungary. 
Social Democratic Party merges with Hun- 
garian Communist Party in June 1948 to form 
Hungarian Workers' Party. Soviet-style Con- 
stitution is ratified and Hungarian People's 
Republic is proclaimed, August 1949. Stalinist 
political, economic, and social systems are im- 
posed, 1949-53. Imre Nagy becomes prime 
minister and implements New Course in 
economy, 1953. Nagy loses power in 1955. 
Disaffection mounts in 1955-56, culminat- 
ing in Revolution of 1956 in October. Janos 
Kadar is installed in power by Soviet invaders; 
Hungarian Workers' Party is renamed Hun- 
garian Socialist Workers' Party (HSWP). 
Harsh repression is followed by pragmatic at- 
tempts at reform, 1956-66. New Economic 
Mechanism (economic reform) is put in place, 
1968-72. Opposition to reform mounts, and 
economy is recentralized, 1971-78. Further 
economic reforms take place, 1979-80. New 
electoral law is passed in 1983. Hungary be- 
gins to establish semi-independent foreign 
policy in 1984. Semicompetitive National As- 
sembly and local council elections are held in 
1985. Thirteenth Party Congress of the 
HSWP meets in 1985. Kadar loses party 
leadership to Karoly Grosz at Third Party 
Conference, May 1988. Laws are passed al- 
lowing multiparty system, 1988-89. 



Country Profile 



Formal Name: Republic of Hungary (the name was Hungarian 
People's Republic from August 1949 until October 1989). 

Short Form: Hungary. 

Term for Citizens: Hungarian(s). 

Capital: Budapest. 

Geography 

Size: Approximately 92,103 square kilometers. 

Topography: Lies in the central Danube Basin. Rolling foothills 
in the west; hilly region north of Budapest; remainder of the country 
to the east and south has a variety of terrains. Highest point: Mount 
Kekes, 1,008 meters. 

Climate: Continental and mild. 

Society 

Population: Approximately 10.6 million in 1989; average annual 
growth rate, negative 0.2 percent. 

Ethnic Groups: Magyars more than 95 percent of population. 
Minorities include Gypsies, Germans, Jews, Slovaks, Serbs, Slo- 
venes, Croats, Romanians, and Greeks. 

Language: Modern Hungarian spoken by all. Various dialects used 
at home. Minorities bilingual. 

Religion: Religious freedom guaranteed by Constitution. About 
67.5 percent Roman Catholic, 20 percent Reformed (Calvinist), 
5 percent Lutheran, and 5 percent unaffiliated. Small numbers of 
other Protestant sects, Uniates, Orthodox, and Jews. 

Education: Free, compulsory education from ages six to sixteen. 
About half of students get vocational and technical training. About 
10 percent of population aged eighteen to twenty-two enrolled in 
regular daytime courses in higher education. 

Welfare: Social insurance program includes free health care, unem- 
ployment compensation, and retirement benefits. Health care good, 
with decline in infant mortality and incidence of communicable 
diseases. High proportion of elderly; pensions low relative to wages. 



xix 



Economy 

Gross National Product: Estimated at US$84 billion in 1986; 
US$7,910 per capita, with 1.3 percent growth rate. 

Energy and Mining: Country energy deficient; relies on imported 
crude oil and natural gas from Soviet Union and domestic lignite. 
Coal reserves plentiful, but energy a major problem for the 1990s. 
Dependent on imports for iron and nonferrous metals. 

Industry: Manufacturing and chemicals predominate, with light 
industry and food processing also important. Emphasis on heavy 
industry in postwar period. 

Agriculture: Largely collectivized, but with decentralized, loose 
restrictions on self-financing, much emphasis on private-plot 
production, and no obligatory targets. Very efficient by East Euro- 
ean standards; net exporter of grain, meat, and meat products. 

Foreign Trade: Most important trading partner Soviet Union, but 
about half of foreign trade with Western countries. Principal im- 
ports: fuels, raw materials and semifinished products, agricultural 
and forestry products, light industrial goods. Principal exports: 
agricultural products, pharmaceuticals, bauxite, machine tools, and 
lighting equipment. Balance of trade negative in 1986: exports 
US$9.2 billion; imports US$9.6 billion. 

Exchange Rate: Exchange rate in July 1989 about sixty -two forints 
per US$1. 

Fiscal Year: Calendar year. 

Fiscal Policy: Central planning with market reforms in the late 
1980s to decentralize economic decision making and broaden scope 
for private ownership. 

Transportation and Communications 

Railroads: 7,769 kilometers total in 1986, of which 7,513 kilometers 
standard gauge, 221 narrow gauge, and 35 kilometers broad gauge; 
1,128 kilometers double-tracked and 1,918 kilometers electrified. 

Roads: 140,163 kilometers total in 1986, of which 29,796 kilometers 
concrete, asphalt, and stone block. 

Inland Waterways: 1,622 kilometers in 1986. 

Pipelines: 1,204 kilometers in 1986 for crude oil; 600 kilometers 
in 1986 for refined products; and 3,800 kilometers in 1986 for na- 
tural gas. 



xx 



Ports: Budapest's Csepel the principal port; also Dunaujvaros. 

Airports: Eighty total in 1986, with ten having permanent sur- 
face runways. Budapest's Ferihegy the principal airport and only 
international airport. 

Telecommunications: 770,200 telephones in 1986, or about 145 
per 1,000 persons. Severe shortage of telephone lines. 

Government and Politics 

Politics: Monopolized by Hungarian Socialist Workers' Party 
(HSWP), the communist party. Other parties reappeared in liber- 
alized conditions of late 1980s, including Independent Smallholders' 
Party and Social Democratic Party. Opposition Roundtable en- 
gaged in talks with HSWP to reform political system. 

Government: Constitution of 1949 substantially amended in 1972. 
National Assembly met infrequently but was gaining importance 
in 1989. Presidential Council and Council of Ministers principal 
government bodies. Important posts occupied by high-ranking 
HSWP members. 

Foreign Relations: Diplomatic relations with most countries. Al- 
lied with Soviet Union in international affairs. Relations with Unit- 
ed States throughout postwar period; since late 1970s, these relations 
have warmed considerably and in late 1980s have blossomed. 

International Agreements: Participation in Council for Mutual 
Economic Assistance (Comecon), Warsaw Pact, and United Na- 
tions. Signatory to Helsinki Accords and Mutual and Balanced 
Force Reduction Agreement. 

National Security 

Armed Forces: Hungarian People's Army in 1989 included ground 
forces (77,000 with 58 percent conscripts); air force (22,000 with 
36 percent conscripts); Danube Flotilla (700); and Border Guards 
(11,000 with 70 percent conscripts). All forces organized under 
Ministry of Defense. Soviet Southern Group of Forces stationed 
in Hungary numbered 65,000 troops. 

Ground Forces: Three corps, with combined total of five tank 
brigades and ten motorized rifle brigades; independent artillery and 
surface-to-surface missile brigades; one airborne battalion; one anti- 
tank regiment; one antiaircraft regiment; and surface-to-air mis- 
sile regiments. Danube Flotilla had eighty- two vessels in 1988. 



xxi 



Air Force: One air division and one air defense division. Air divi- 
sion had three fighter or fighter-bomber regiments, one helicopter 
regiment, and one reconnaissance squadron. Air defense division 
had three surface-to-air regiments in late 1980s. 

Equipment: Primarily Soviet. 

Paramilitary: Included Security Police apparatus (15,000) and 
Workers' Guard (60,000) in 1988. Both forces received some mili- 
tary training. 



xxn 



48 



16 



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Megyes (counties) 
National capital 
Megye (county) capital 



S/x cities have megye (county) status 
and also serve as administrative 
centers for surrounding megyes. 



25 



50 Kilometers 

J 1 

50 Mile: 



XXV 



Introduction 



THE HUNGARIAN PEOPLE'S REPUBLIC came into existence 
in 1949 when, with Soviet support, the Hungarian Workers' Party 
(HWP) eliminated the last of its rivals and proclaimed the coun- 
try a "people's democracy." The proclamation of the Hungarian 
People's Republic was part of Soviet dictator Joseph Stalin's plan 
to enforce total Soviet domination over the countries in Eastern 
Europe that Soviet armies had occupied in their war against Nazi 
Germany. 

Like other countries in Eastern Europe, Hungary was completely 
Sovietized. The Constitution of 1949 established the leading role 
of the HWP in all aspects of Hungarian life. In turn, the HWP 
took its orders from Stalin. Hungary was also forced to adopt the 
Soviet model in its economy and society. Hungary embarked on 
an ambitious drive to industrialize its economy, and the new re- 
gime collectivized agriculture. The property of the prewar ruling 
classes was expropriated, and the regime undertook a reign of ter- 
ror against its perceived political enemies, who eventually included 
a number of prominent communists. The Hungarian military was 
subordinated to the Soviet military, and the regime established a 
large secret police force, which answered to Moscow, not Budapest. 

On October 23, 1989, the Hungarian People's Republic came 
to an end. Acting President Matyas Szuros proclaimed the new 
republic: "As provisional president of our Republic, I greet . . . 
the citizens of our country, our friends abroad. I ceremonially an- 
nounce that, with the declaration of the Constitution amended by 
the National Assembly, as from today, October 23, 1989, our coun- 
try's state form and name is the Republic of Hungary." New 
amendments to the Constitution asserted "the values of both bour- 
geois democracy and democratic socialism," eliminated the clause 
of the Constitution that established the leading role of the com- 
munist party in government and society, and proclaimed a regime 
based on the rule of law. These new amendments followed the Four- 
teenth Party Congress of the Hungarian Socialist Workers' Party 
(HSWP — the Hungarian Workers' Party had been renamed the 
Hungarian Socialist Workers' Party on November 1, 1956), in 
which the party split between reformers and conservatives. Out 
of this congress, which had convened October 6, a new party 
emerged — the Hungarian Socialist Party (HSP) — which was mod- 
eled on the socialist parties of Western Europe and was designed 
to operate within a multiparty system. Thus, in 1989 Hungary 



xxvn 



experienced a political transformation. With Poland, it was in the 
forefront of communist countries attempting to reform their polity, 
economy, and social relations. 

A number of internal economic and social factors led to the cri- 
sis that brought about this transformation. A Soviet leadership it- 
self attempting to carry through far-reaching reforms allowed 
Hungary to implement radical reforms. The example of wide- 
ranging political and economic reforms in Poland also spurred Hun- 
gary 's leaders to action. 

The economic crisis had been brewing since the mid-1970s. Be- 
ginning in 1973, world oil prices rose precipitously, having a 
devastating effect on Hungary, which was almost completely de- 
pendent on foreign energy suppliers, mainly the Soviet Union. 
Hungary's leaders responded to higher energy prices with a plan 
to accelerate economic growth and launched a number of major 
economic projects, but they could not carry them out efficiently. 
These efforts were designed to produce goods that could be exported 
in return for energy. Moreover, spending on consumption and in- 
vestment also rose. To cover the costs of energy, consumption, and 
investment, Hungary borrowed from abroad, but, because its 
exports were unable to cover the costs of its hard-currency bor- 
rowings, the country ran up a large foreign currency deficit. Con- 
servatives in the leadership used these problems to win support for 
the reversal of economic reforms that had been instituted in the 
late 1960s. 

Similar problems arose in the late 1970s and early 1980s. Again, 
world energy prices rose, and Western banks limited the flow of 
credits as a result of the crackdown on the Solidarity labor move- 
ment in Poland and the insolvency in Romania. Increases in in- 
terest rates caused problems for Hungary's balance of payments. 

Hungary joined the International Monetary Fund (IMF — see 
Glossary) and the World Bank (see Glossary) in 1982. These in- 
stitutions compelled Hungary to introduce a new stabilization pro- 
gram, which called for reductions in spending on investment and 
consumption. Although by 1985 spending on investment was 21.8 
percent less than it had been in 1981, prices rose. The Sixth Five- 
Year Plan (1981-85) called for economic growth of 14 percent to 
17 percent over the previous plan period, but in fact growth rose 
only 7 percent. Industrial production increased a mere 12 percent, 
although the plan called for growth of 19 percent to 22 percent. 
Exports were to rise 37 to 39 percent but in fact rose only 27 percent. 

Performance fell far short of the plan in the late 1980s as well. 
In 1986 national income, industrial production, and agricultural 
production did not meet the levels called for in the plan. In 1987 



xxviii 



the economy fared somewhat better, but in 1988 inflation far ex- 
ceeded the rate for the previous year. Hungary's foreign currency 
debt rose from US$8.6 billion in 1985 to US$18 billion by December 
1987. 

In 1989 the country's economic problems continued. By the end 
of 1989, Hungary had a state budget deficit of approximately 62.2 
billion forints (for value of the forint — see Glossary), more than 
three times the planned budget deficit of 19.5 billion forints. The 
foreign debt stood at US$20 billion. Hungary had to cut its deficit 
or forego the last installment of a loan it had obtained from the 
IMF in May 1988. Inflation continued as well. Wages rose 12 to 
13 percent rather than the planned 6 to 7 percent. Prices rose 15 
to 16 percent rather than the planned 12 to 15 percent. From Janu- 
ary through September 1989, industrial production was only 98.4 
percent of what it had been during the same period in 1988. Out- 
put of the manufacturing sector fell 5.1 percent. Exports rose by 
about 22 percent in 1989, but the need to increase exports to the 
West forced enterprises to forego profitability in the interests of 
earning hard currency. As a result, bills owed to Hungarian firms 
went unpaid. In 1989 domestic debt stood at 950 billion forints. 

Society felt the effects of the country's economic problems. To 
make ends meet, most Hungarians had to work very hard; in many 
cases, they worked more than one job. Western analysts estimated 
that between 25 and 40 percent of the population lived below the 
poverty level (about 5,200 forints per month). Average monthly 
wages were a mere 6,000 forints. Official statistics classed between 
1.5 million and 3 million people (out of a population of 10.6 mil- 
lion) as "socially poor." This group included a large share of re- 
tired persons, about half of families with two children, and 70 to 
90 percent of families with three or more children. Single heads 
of households and people working on less productive collective farms 
or living on isolated homesteads were also likely to be living below 
the poverty line. 

Economic problems took their toll on the family. In the 1980s, 
every third marriage ended in divorce, and single parents headed 
about 12 percent of all families. In addition to the heavy work load 
needed to achieve a decent standard of living, another source of 
strain on the family was the shortage of housing, especially for young 
families. Having reduced its direct role in the provision of hous- 
ing, the government encouraged private individuals to construct 
their own homes. By the late 1980s, most new housing units were 
privately constructed, but the country had a long way to go to meet 
the housing needs of its citizens. 



xxix 



In 1989 the government took steps to solve these problems. In 
contrast to the Soviet reaction to the 1956 uprising in Hungary 
and the 1968 Prague Spring in Czechoslovakia, when it invaded 
these countries to ensure continued communist party domination, 
the Soviet Union in 1989 announced support for Hungary's polit- 
ical and economic reform efforts. Such reforms included the in- 
troduction of a capitalist market economy and the emergence of 
a multiparty system, anathema to the old communist system. 

In addition, Hungary could count on Poland to join it in a pro- 
reform bloc within the Warsaw Pact alliance (see Glossary). In June 
1989, the first free elections in the history of postwar Eastern Eu- 
rope took place in Poland. These elections eventually brought to 
power a Solidarity-led government that intended to institute many 
of the same political and economic reforms in Poland that Hun- 
gary's leaders, as well as Hungary's opposition groups, envisaged 
for their country. In late 1989, the reform bloc within the Warsaw 
Pact was strengthened as the German Democratic Republic (East 
Germany), Bulgaria, and Czechoslovakia began their own reform 
efforts. 

Although the most important steps toward creating a democracy 
were taken in late 1989, the effort actually began with a number 
of measures in the first half of the year. On January 11, 1989, the 
National Assembly passed laws on associations and assembly, the 
first in a series of steps aimed at introducing a multiparty system 
in Hungary. On March 15, 1989, for the first time in postwar his- 
tory, the government allowed commemoration of the anniversary 
of the 1848 revolt against the Habsburg Empire. About 100,000 
people attended the demonstration in Budapest, and smaller demon- 
strations took place throughout the country. The demonstrators 
called for government recognition of civil and political rights and 
political pluralism. Shortly thereafter, Imre Mecs, a member of 
the dissident Committee for Historical Justice, said that a return 
to the old ways of ruling the country would be very difficult 4 'after 
hundreds of thousands of people throughout the country have 
shouted out demands for their rights." On March 22, 1989, the 
National Assembly passed a law that granted the right to strike 
(although within strictly defined limits). 

The reburial of Imre Nagy and his associates on June 1 6 marked 
the most important symbolic break with Hungary's past in the first 
half of 1989. Most Hungarians had never accepted the regime's 
verdict that the events of 1956 represented a counterrevolution 
against Marxism-Leninism. The massive attendance at the rebu- 
rial and the millions who watched the events on television showed 



xxx 



that Hungarians rejected the regime that had been placed in power 
by Soviet troops in 1956. 

The media were becoming more open as a consequence of the 
reforms. In late 1988, a number of independent publications had 
been established, including Kapu (Gate), which had a circulation 
of more than 35,000 by January 1989; Reform, part of a joint ven- 
ture with media magnate Axel Springer's conglomerate in the Fed- 
eral Republic of Germany (West Germany), which by early 1989 
had a circulation of 256,000; and Hitel (Credit), which covered so- 
cial and political issues and literature. 

It was the HSWP that set the stage for more profound changes. 
Party leaders Imre Pozsgay and Rezso Nyers sought to manage 
the country's severe economic, social, and political problems by 
sharing power with organizations representing other sectors of the 
population. Indeed, the party's reformist wing — which was headed 
by Pozsgay and Nyers — had accepted the ideas and program of 
the opposition. 

The strength of the reformers became apparent at a February 
10, 1989, plenum of the Central Committee of the HSWP. At that 
plenum, the party set as its goal the achievement of popular 
sovereignty and a constitutional state. At a February 20 plenum, 
the party Central Committee approved a draft of a new constitu- 
tion that contained no clause on the leading role of the party. At 
its March 1989 plenum, the party Central Committee came out 
in support of a multiparty system, free elections, and independent 
trade unions; recognized certain individual freedoms; and called 
for the creation of a state governed by a democratic socialist con- 
stitution and characterized by an independent judiciary, represen- 
tative democracy, and depoliticized military. The party's new 
Action Program "offered cooperation and agreement on national 
issues of vital importance to all citizens and organizations that think 
in a progressive manner and accept responsibility for the country. " 
In line with its changed outlook, the Central Committee gave up 
its nomenklatura (see Glossary) authority. According to one party 
spokesman, this right had become "obsolete." Indeed, on May 
10, 1989, the National Assembly approved a government reshuf- 
fle involving five ministers and one state secretary with ministeri- 
al rank. Chairman of the Council of Ministers Miklos Nemeth 
himself, rather than the Central Committee of the HSWP, selected 
the new officials. 

The Central Committee also outlined a reform program for the 
economy. At its February 10 plenum, the Central Committee de- 
termined to end the country's "economic, political, and moral cri- 
sis" by creating a market economy based on mixed ownership. On 



xxxi 



May 4, 1989, the Central Committee released its "Proposal for 
a Three- Year Transformation and Stabilization Program," which 
called for opening up Hungary to world markets and trade and 
maintaining the country's solvency and creditworthiness. The 
proposal advocated a change from state ownership to stock com- 
panies and limited partnerships and "the sale of state-owned [en- 
terprises] to foreigners and private individuals." State subsidies 
to enterprises would be drastically reduced. The proposal stressed 
the importance of small- and medium- sized companies. For agricul- 
ture, the proposal advocated private ownership, easy lease terms, 
and the purchase of land by private individuals. 

The new legislation on political parties and the liberalized at- 
mosphere in the country led to the formation of many new poli- 
tical parties. Indeed, with the decisions made by the HS WP in the 
late winter of 1988 and spring of 1989, it was clear that the HS WP 
was taking many aspects of its own reform program from the pro- 
grams of other parties and organizations promoting fundamental 
political and economic changes. Many of these parties were not 
altogether new, however; they were revivals of historical parties 
that had been disbanded in the late 1940s. Other parties were in- 
deed new, formed largely by dissident intellectuals and students. 

The first historical party to reemerge after years of inactivity was 
the Independent Smallholders' Party, which was refounded in 
November 1988. In August 1989, the Smallholders had an esti- 
mated 6,000 members grouped into 230 chapters. The party called 
for privatization of the economy and free enterprise; returning land 
to the peasants from whom it had been seized during Hungary's 
campaign to collectivize agriculture in the late 1940s; free elections 
in a pluralistic multiparty political system; and a new constitution 
that would include a clause establishing Hungary's neutrality. 

Another historical party that reestablished itself was the Hun- 
garian Independence Party, which was refounded on April 24, 1989. 
The members of the original Hungarian Independence Party had 
broken with the Smallholders' Party in 1947 because they believed 
that the Smallholders were too willing to cooperate with the Hun- 
garian Communist Party. In 1989 the main political goal of the 
Hungarian Independence Party was "the purest democracy." It 
advocated government recognition of individual political and civil 
rights; the removal of communist party control over the army, 
police, and judiciary; the expansion of legislative power at the ex- 
pense of the executive; a free market system; strong support for 
private sector entrepreneurship; tax relief to encourage entre- 
preneurs; the reprivatization of agriculture; and "perpetual neu- 
trality" for Hungary. 



xxxn 



The Democratic People's Party was active in Hungarian poli- 
tics in the late 1940s but was banned in 1949. In 1989 this party 
reappeared as the Christian Democratic People's Party, which grew 
out of the Aron Marton Association (named after a Catholic bishop 
in Transylvania). The draft program of the Christian Democratic 
People's Party defined it as "a political organization with a Chris- 
tian worldview that is, however, independent of the Churches." 
It called for multiparty democracy, parliamentary government, full 
guarantees for human and civil rights, and autonomy for local com- 
munities. For the economy, this party advocated free enterprise 
combined with a welfare system to help those disadvantaged by 
a free market system. In foreign policy, the Christian Democratic 
People's Party called for accelerating Hungary's integration into 
Europe and the country's return to the fold of Christian civilization. 

Finally, among the historical parties, the Social Democratic Party 
was refounded on January 9, 1989. Originally founded in 1890, 
the Social Democratic Party was forced to merge with the Hun- 
garian Communist Party in June 1948 to create the Hungarian 
Workers' Party. Leaders of the reemergent Social Democratic Party 
claimed 30,000 members, but the actual figure was closer to 3,000. 
The party was weakened by a split between those who had belonged 
to the party before 1948 and younger members who sought leader- 
ship positions. The Social Democratic Party advocated a West 
European-style social democracy for Hungary. 

Of the new political parties, the largest at the end of 1989 was 
the Hungarian Democratic Forum, which was founded on Sep- 
tember 27, 1987. In November 1989, the forum had approximately 
20,200 members organized into 327 local organizations in 306 
localities across Hungary. This party was largely the creation of 
the provincial intelligentsia and was closely identified with Hun- 
garian populism (an interwar political movement that distrusted 
Western capitalism and favored an economy based on small agricul- 
tural producers and independent peasant entrepreneurs; it also in- 
cluded antirationalist and anti-semitic strains). It advocated free 
and democratic elections, a multiparty system, an increase in fund- 
ing for education and culture, improvement of social security, and 
a greater role for the church in providing social services. The Hun- 
garian Democratic Forum came out for a "third road" for the econ- 
omy: an economy neither capitalist nor socialist. It proposed 
dismantling the state sector in a " socially controlled and economi- 
cally rational way" and encouraging the emergence of an entre- 
preneurial stratum. However, the entrepreneurs were to be groups, 
not individuals. 



xxxiii 



The Alliance of Free Democrats was founded on December 1 3 , 
1988. In July 1989, the alliance had about 3,000 members, who 
were organized into twenty chapters in Budapest and fifteen in the 
counties. This party was largely the creation of the Budapest in- 
telligentsia. Two ideological strains made up the alliance: demo- 
cratic socialists, who favored state intervention in the economy and 
a mixture of both state and private property; and classical liberals, 
who supported an unrestrained free market and the denationali- 
zation of the economy. The party's program called for a new con- 
stitution to end the communist party's monopoly of power, to secure 
the sovereignty of the people, and to limit the power of the state 
by separating the powers of the executive, legislature, and judiciary. 
In the economic realm, the alliance's program called for the "dena- 
tionalization of the economy," the expansion of private ownership, 
cuts in military expenditure, and state assistance to the poorest 
members of the population to minimize poverty. In foreign pol- 
icy, the alliance advocated neutrality for Hungary and the with- 
drawal of Soviet troops. 

The Federation of Young Democrats, founded in 1988, was made 
up of 4,000 to 5,000 members between the ages of sixteen and thirty- 
five. Members were mainly college and university students. The 
party advocated a multiparty system, political and military indepen- 
dence, the evolution of the Warsaw Pact into a political alliance, 
and the privatization of economic assets. 

In the spring of 1989, several opposition parties joined together 
to form the Opposition Roundtable to establish new rules for the 
conduct of politics as Hungary entered the era of reform. The 
roundtable was made up of the Alliance of Free Democrats, the 
Hungarian Democratic Forum, the Social Democratic Party, the 
Independent Smallholders' Party, the Hungarian People's Party, 
the Federation of Young Democrats, and the Endre Bajcsy- 
Zsilinszky Society (an organization dedicated to environmental 
protection and the defense of Hungarian minority rights in Roma- 
nia). (The Democratic League of Free Trade Unions had observ- 
er status at the roundtable.) The Opposition Roundtable had two 
basic objectives: to enter into talks with the HSWP to determine 
the principles and rules that would govern the transition to a 
pluralist democracy, and to discuss the means necessary to over- 
come Hungary's social and economic crisis. 

In June 1989, the Opposition Roundtable entered into formal 
talks with the HSWP and the so-called "third side," which was 
made up of the Patriotic People's Front, the National Council of 
Trade Unions, and other organizations allied with the HSWP. In 
the negotiations, one committee dealt with political matters, 



xxxiv 



including constitutional changes, establishment of a presidency, 
setting of a date for elections to the National Assembly, revisions 
of the penal code, creation of a new law on information, and secur- 
ing of guarantees against a violent rollback of the reform process. 
A second committee dealt with economic problems, including the 
reform of property rights, the introduction and strengthening of 
market mechanisms in the economy, and, most generally, "stra- 
tegic questions of dealing with the economic crisis" and the means 
of treating the social consequences of the crisis. 

The Opposition Roundtable and the party had different objec- 
tives in the negotiations. The former negotiated on the premise 
that the roots of the economic crisis lay in the political system; it 
therefore sought to emphasize constitutional changes and overall 
political reform. By contrast, the HSWP emphasized measures to 
alter the economy. Thus, the party sought to make the opposition 
groups in the roundtable share responsibility for the dislocations, 
unemployment, and inflation that would accompany the effort to 
pull Hungary out of its economic crisis. The party hoped to share 
political responsibility and yet give up as little power as possible. 
The HSWP hoped to exact agreement to its economic reform pro- 
gram by threatening to effect political reforms without the partici- 
pation of the Opposition Roundtable. About 75 percent of the 
delegates to the National Assembly were HSWP members, and 
the party leadership believed it could ram through reforms using 
its vast majority in the legislature. 

The parties that made up the Opposition Roundtable represented 
only a very small fraction of the population. Further, the HSWP, 
although numbering several hundred thousand members, had lit- 
tle claim to legitimacy within society. The members of the "third 
side" also had little support among society as a whole. Thus, in 
the summer of 1989 a number of critics complained that the popu- 
lation as a whole had no say in the negotiations that were deter- 
mining Hungary's political and economic future. 

In several elections to fill seats in the National Assembly that 
had been vacated, the population did have the chance to make its 
voice heard. The HSWP lost every election. 

On July 22, 1989, Gabor Rozsik was the first opposition candi- 
date elected to the National Assembly. He ran for election in the 
town of Godollo, near Budapest, and won 69.5 percent of the vote. 
Rozsik was a candidate of the Hungarian Democratic Forum but 
also had the support of the Alliance of Free Democrats and the 
Federation of Young Democrats. 

In other elections held on July 22, either less than the required 
50 percent of the eligible voters of the election district participated 



xxxv 



or else none of the candidates managed to receive a majority of 
the votes cast. In Szeged the Hungarian Democratic Forum's can- 
didate won 59.4 percent of the vote, but the turnout was less than 
the required 50 percent. In the repeat election on August 5, the 
Hungarian Democratic Forum's candidate won with about 62 per- 
cent of the vote, while the HSWP's candidate received 22 percent 
of the vote. In Kecskemet no candidate received the majority of 
votes, but in the August 5 runoff election, the Hungarian Demo- 
cratic Forum's candidate won with about 70 percent of the vote. 
In the July 22 election in Kiskunf-elegyhaza, 61 percent of the peo- 
ple voted, but no candidate received a majority. The HSWP's can- 
didate, however, won 44.7 percent of the votes, the highest vote 
total. In the repeat election, only 46 percent of eligible voters par- 
ticipated, and the result was therefore invalid. 

Finally, in a September 16 election for a National Assembly seat 
in Zala County, the HSWP candidate received less than one-third 
of the votes cast. The Hungarian Democratic Forum, the Alliance 
of Free Democrats, and the Federation of Young Democrats all 
supported the winner, who received more than 59 percent of the 
vote. 

These elections demonstrated serious weaknesses on the part of 
the HSWP. In all locales, despite almost a total monopoly of the 
media and overwhelming advantages over the opposition in funds 
available to run campaigns, HSWP candidates showed poorly. 
These elections served as yet another reminder that the HSWP had 
either to transform itself fundamentally or to resign itself to a mar- 
ginal role in Hungary's new political system. 

Other evidence for the lack of support for the HSWP came from 
poll data. A survey conducted by Janos Simon and Laszlo Bruszt 
of the Sociological and Social Science Institute of the Hungarian 
Academy of Sciences found that only 36.5 percent of those sur- 
veyed would vote for the HSWP. Most of that support came in 
the villages and small towns. The support of the remainder of those 
surveyed was divided among the Social Democratic Party (13 per- 
cent); the Hungarian Democratic Forum (11.4 percent); the Alli- 
ance of Free Democrats (5.6 percent); the Smallholders' Party (5.4 
percent); the Hungarian People's Party (4.3 percent); and the 
Christian Democratic People's Party (4.3 percent). 

The lack of public support for the HSWP did not deter it from 
attempting to carry through its objectives in negotiations with the 
Opposition Roundtable. In September an agreement was signed 
that seemed at least in the short run to have met the HSWP's ob- 
jectives. In addition, this agreement caused a split in the round- 
table itself, thereby seeming to bring additional benefits to the party. 



xxxvi 



The agreement between the HSWP and the Hungarian 
Democratic Forum, the Independent Smallholders' Party, the Hun- 
garian People's Party, and the Endre Bajscy-Zsilinszky Society was 
to establish "the political and legal conditions for a peaceful tran- 
sition to a multiparty system." It contained six draft laws dealing 
with the following issues: the establishment of a constitutional court 
to ensure the constitutionality of legislation; the acceptance by the 
HSWP of the values of bourgeois democracy and democratic so- 
cialism; a draft electoral law; amendments to the penal code and 
criminal code to ensure that they "conform to the accepted norms 
of human and civil rights"; an increase in the amount of state aid 
for election campaigns from 35 million forints to 100 million forints; 
and the surrender by the HSWP of some 2 billion forints of its 
assets to finance other political parties. 

The agreement also called for the creation of a presidency that 
would embody the unity of the nation, exercise authority through 
the Council of Ministers, and act as commander in chief of the 
armed forces in peacetime. Any party or group with 50,000 sup- 
porting signatures could nominate candidates for president and vice 
president. The winning candidate would have to receive at least 
half the votes with a minimum turnout of half to two-thirds of the 
electorate. If no candidate received the necessary number of votes, 
a second round of voting would be held. According to the agree- 
ment, the presidential election was to take place before new elec- 
tions to the National Assembly. 

The Alliance of Free Democrats and the Federation of Young 
Democrats did not sign the agreement. First, they argued that it 
failed to require the withdrawal of the HSWP from the workplace, 
a presence that lay at the basis of the party's substantial control 
over the economy. Second, these two parties maintained that the 
agreement did not call upon the HSWP to render a full account- 
ing of its finances and property. Third, the Alliance of Free 
Democrats and the Federation of Young Democrats also believed 
that the agreement was inadequate because it did not call for the 
dissolution of the Workers' Guard, the HSWP's private army. 

Fourth and perhaps most important, the Alliance of Free 
Democrats and the Federation of Young Democrats held that the 
agreement was seriously flawed in setting the elections for presi- 
dent before the elections to the National Assembly. The HSWP 
wanted the elections for president to be held relatively quickly be- 
cause its candidate — Imre Pozsgay — was the most popular politi- 
cal figure in the country at the time. For its part, the Hungarian 
Democratic Forum minimized the importance of Pozsgay 's can- 
didacy because of the difficulty of even a well-known politician's 



xxxvii 



winning an absolute majority, the damage already caused to 
Pozsgay's candidacy by his role in the HSWP leadership, and the 
fact that Pozsgay could not count on the support of the conserva- 
tive and centrist factions of the HSWP. The Alliance of Free 
Democrats argued, by contrast, that election of a president before 
the elections to the National Assembly would distort the parliamen- 
tary elections, that only the new National Assembly should have 
the power to define the role of the elections to the National As- 
sembly, and that the new president could unduly influence the out- 
come of the elections to the National Assembly. Finally, the Alliance 
of Free Democrats and the Federation of Young Democrats under- 
scored the dangers of electing a communist president in a fledg- 
ling democracy. 

The Alliance of Free Democrats and the Federation of Young 
Democrats decided to call for the resolution of these four issues 
by a popular referendum. According to a law passed on June 15, 
1989, 100,000 signatures would be sufficient to call for a binding 
popular referendum on matters subject to political dispute. The 
two parties managed to collect almost 200,000 signatures, and a 
referendum was scheduled for November 26. The Alliance of Free 
Democrats and the Federation of Young Democrats both urged 
Hungarians to render a vote of "yes' ' on the following issues: dis- 
banding the Workers' Guard, abolishing party cells in the work- 
place, demanding that the HSWP give a full account of its assets, 
and requiring that the newly elected National Assembly elect the 
president. 

On September 18, 1989, negotiations on the economy began be- 
tween the Opposition Roundtable and the HSWP. Talks were 
quickly suspended in the third committee, which was charged with 
discussing changes in ownership and determining how many en- 
terprises should remain under state control. Talks proceeded in 
the other five committees, which dealt with the state budget deficit, 
major state investments, social welfare, land reform, and owner- 
ship reform. 

HSWP losses in the four valid National Assembly elections, the 
agreement with elements of the Opposition Roundtable, and the 
widespread dissatisfaction with the agreement reached between the 
roundtable and the party set the stage for the Fourteenth Party 
Congress of the HSWP, which began on October 6, 1989. These 
events demonstrated that Hungary had entered a new political era 
in which the methods and structure of a Marxist-Leninist party 
were no longer relevant. The decisions reached at the Fourteenth 
Party Congress marked an attempt by the party leadership to adapt 
to this new era. 



xxxvm 



The party had undergone some significant changes prior to the 
congress. The most important among these changes was the emer- 
gence of factions within the party. Marxist-Leninist parties had 
long condemned factions within their ranks; decision making was 
carried out via democratic centralism, which required a unified 
party position in support of the leadership on all issues of theory 
and practice. 

In late 1988 and 1989, factions did indeed arise within the party, 
whose leadership was split between reformers (who encouraged the 
rise of factions) and conservatives (who condemned the incipient 
factions). Factions in support of reforms within the party — known 
as the "reform circles" — had been growing rapidly since Novem- 
ber 1988, when the first groups were organized by Jozsef Geczi 
of the Department of Political Theory at Attila Jozsef University 
in Szeged. The first national conference of reform circles took place 
in Szeged on May 21-22, 1989, and was attended by more than 
400 representatives of 110 reform groups. The manifesto produced 
by the conference maintained that problems in Hungary were part 
of a "crisis of Asiatic despotism." The document called for the 
building of a new organization based on the values of the Hungar- 
ian progressive movement, the socialist movement, progressive 
bourgeois traditions, and Hungarian populism. The manifesto 
demanded the reform of the HSWP. The reform circles also held 
a second conference in Budapest on September 2-3 to prepare for 
the party congress. 

By contrast, the Ferenc Miinnich Society (named after the 
minister of the armed forces and internal affairs who came to power 
with Janos Kadar in 1956) was a faction formed by party conser- 
vatives in November 1988. Retired army officers, retired state secu- 
rity officers, members of the Workers' Guard, and conservative 
party members predominated among its 10,000 to 20,000 mem- 
bers. According to Robert Ribanszki, who was one of the socie- 
ty's leaders, "the primary goal of the [Ferenc Miinnich Society] 
is to stop the further deterioration of socialist achievements . . . 
and to lend support to the development and strengthening of so- 
cialism." The Ferenc Miinnich Society sought the retention of the 
HSWP's leading role in social, economic, and governmental in- 
stitutions. It strongly criticized the reform circles and the party's 
reform leaders, chiefly Pozsgay and Nyers. 

Delegates to the Fourteenth Party Congress of the HSWP came 
from the different party factions. In fact, the rules for election of 
delegates expressly called for the representation of these factions 
at the congress. Every party member could "propose delegates and 
be eligible for election." The guidelines stressed that members were 



xxxix 



to acquaint themselves with the views of candidates prior to the 
election of delegates, so they could vote for the representatives of 
the faction of their choice. At the congress itself, Pozsgay stated 
that "our party will respect the freedom of platforms and trends, 
and respect the protection of minority rights more strongly" than 
the former party. The guidelines for delegate selection and Pozs- 
gay' s sentiments starkly contrasted with election procedures for 
previous congresses. 

To be sure, party leaders did not always follow the guidelines 
in carrying out the delegate selection. Nevertheless, a number of 
platforms were strongly represented at the congress. At the begin- 
ning of the proceedings, the Reform Alliance had 464 delegates; 
the People's Democratic Platform (a centrist grouping), 68 dele- 
gates; the For the Equality of Chances of the Provinces Platform, 
35 delegates; the For the HSWP Platform, 35 delegates; the Young 
People's Platform, 28 delegates; and the Agricultural and Food 
Processing Platform, 28 delegates. In addition, in another depar- 
ture from previous congresses, delegates from districts south of Lake 
Balaton and the southwest met to decide on a common approach 
to the interests of their regions (see fig. 1). 

The Reform Alliance was the best organized of the factions, and 
it had the most elaborate program. By the end of the second day 
of the congress, the Reform Alliance had 511 members, about 40 
percent of the total. This faction played an important role in the 
outcome of the congress. It called for an open break with the past, 
as well as for a repudiation of the HSWP's crimes and mistakes, 
and it sought to staff leadership positions with new personnel who 
would promote new kinds of policies. The Reform Alliance also 
advocated the democratization of party decision making. 

Indeed, in large measure the congress produced the new poli- 
cies called for by the Reform Alliance. To begin with, the party 
changed its name to the Hungarian Socialist Party (HSP). The 
party's statutes still defined it as a "Marxist political organization," 
but it fully accepted "the values of human development, human- 
ism, freedom, and democracy." The term Leninist did not appear 
in any of the documents emanating from the congress. 

The HSP's manifesto dedicated the organization to building a 
"democratic, law-governed state marked by direct democracy" and 
the creation of a "market-based economy." The party also called 
for a social welfare policy to moderate extreme differences in liv- 
ing standards but at the same time advocated a system of wages 
and salaries to reward productivity. The party's program sought 
an "undisturbed and balanced relationship" with the Soviet Union 
but at the same time obligated the party to work for mutually 



xl 



advantageous political and economic relations with every coun- 
try and with every "integrating and cooperative organization." 
Finally, the HSP came out firmly in support of minority rights 
within Hungary and castigated the violation of the rights of Hun- 
garians elsewhere. 

The HSP's rejection of Leninist organizational principles was 
clearly apparent in its new organizational structure. The bylaws 
allowed freedom of choice in joining or leaving the party; freedom 
of conscience, expression, and action; and tolerance of different 
views, opinions, and trends within the party. It also located in the 
will of the membership the source of every decision and action by 
the party. According to the bylaws, any minority view that had 
the support of at least 10 percent of the membership was to be stated 
along with the position of the majority. Terms of office for party 
officials were to be decided by the electing forum; nominations were 
to take place by open ballot, and elections were to be held by secret 
ballot. 

The party congress was to be the HSP's highest representative 
and decision-making organ. The National Steering Committee 
replaced the Central Committee to act as "the party membership's 
representative and control organ between the congresses." The Na- 
tional Presidium, consisting of twenty-five people, was to lead the 
party between congresses. Except for the chairman of the HSP, 
members of the National Presidium could not be members of the 
Steering Committee. The party leader, called the chairman, was 
to be elected by a secret ballot of the party congress. Rezso Nyers 
was elected chairman of the HSP with 87 percent of the vote. The 
chairman and the leader of the party's bloc in the National As- 
sembly served as ex officio members of the National Presidium; 
all others were elected from a slate of candidates prepared by the 
delegates to the congress, by a nominating committee, or by the 
chairman. The National Conciliation Committee was set up to pro- 
tect party members' rights and to ensure that the actions of na- 
tional and local party organs conformed to the HSP's bylaws. The 
Central Financial Committee was established to manage the party's 
finances and property. 

At the bottom of the HSP's organizational pyramid were the 
basic organizations, which required a minimum of three members. 
Local organizations were to be set up in election districts through- 
out the country. Regional party organs were to be established at 
the county level and in Budapest. According to the bylaws, these 
party organs were independent of the national organization. They 
were to decide on their own which candidates to nominate for elec- 
tion to local representative bodies within their jurisdictions, and 



xli 



they could nominate candidates from their jurisdictions for elec- 
tion to the National Assembly. 

At the Fourteenth Party Congress, the leadership gave each 
HSWP member until October 31, 1989, to decide whether or not 
to accept membership in the new party. The HSWP's member- 
ship had declined throughout 1989. In mid- 1988 the HSWP had 
approximately 817,000 members; by September 1989, its mem- 
bership stood at 725,000. However, relatively few members of the 
old party decided to join the new organization. As a result, the 
leadership decided to extend the deadline for old HSWP members 
to December 31. As of mid-December, the HSP claimed about 
51,000 members. 

Reactions of Hungary's opposition groups to the changes in the 
HSWP were decidedly mixed. The Hungarian Democratic Forum 
stated that ''reform of the ruling party is a long-awaited and im- 
portant event" but believed that the party had failed to make a 
clear break with the past. The Alliance of Free Democrats feared 
that "the setting up of the HSP does not mean genuine change. 
The first resolutions of the new party and the composition of its 
presidium do not indicate, for the time being, a break away from 
its past as a state party." The Social Democratic Party stated that 
it "did not consider the new socialist party, which carries certain 
social democratic features, a real political rival" and that free elec- 
tions would show whether the public considered the changes to be 
credible. 

Conservative party members decided to maintain the existence 
of the HSWP. Former General Secretary Karoly Grosz was to be- 
come a member, as was Janos Berecz, the former HSWP ideology 
secretary. The conservatives held their own Fourteenth Party Con- 
gress of the HSWP in mid-December 1989. The HSWP leader- 
ship dedicated itself to creating a "unified Marxist party of workers, 
peasants, and intellectuals" to retain the achievements of the past 
four decades, to overcome the country's "stifling crisis," and to 
find paths leading to the realization of socialist ideals. 

Shortly after the HSP congress, the National Assembly took ac- 
tion on three measures that were the subject of the November 26 
referendum called for by the Alliance of Free Democrats and the 
Federation of Young Democrats. In a session on October 17-18, 
the National Assembly voted to ban all party organizations from 
the workplace. At the same session, the legislature passed a law 
on political parties, which called for redistribution of some of the 
HSP's assets to other political parties and the selling off of other 
party assets to help finance the government's health and educa- 
tion systems. Finally, on October 20 the National Assembly 



xlii 



disbanded the Workers' Guard, without naming a successor or- 
ganization. 

In October the National Assembly also passed a number of other 
measures that would have a significant impact on Hungary's po- 
litical future. The country's name was changed to the Republic 
of Hungary. A new amendment to the Constitution vested legis- 
lative power solely in the National Assembly, which henceforth 
would have the power to draft and enact laws, confirm the govern- 
ment, and pass a budget. A second new amendment abolished the 
Presidential Council and in its place established the presidency. 
The president of the republic, who was given a term of office of 
four years, was granted extensive powers: to serve as commander 
in chief of the armed forces; to declare war or a state of emergency 
if the National Assembly were prevented from doing so; to represent 
Hungary in foreign relations; to sign international agreements; and 
to nominate the president of the Supreme Court (who then required 
confirmation by the National Assembly). 

A third amendment created the Constitutional Court to review 
the constitutionality of laws. It was to have power to annul laws 
deemed unconstitutional. Individuals and institutions could turn 
to the court with grievances against the state. The Constitutional 
Court consisted of fifteen judges, who were to be nominated by 
a committee of the National Assembly made up of representatives 
of various parties and then confirmed by the whole National As- 
sembly. 

Yet another amendment stated that "the Hungarian Republic 
recognizes the inalienable and inviolable rights of man" and that 
the state's foremost duty is to protect those rights. The Constitu- 
tion explicitiy endorsed the freedoms of speech, press, and assembly. 

Finally, an amendment on the economic system defined it as "a 
market economy that also makes use of the advantages of economic 
planning, and in which public and private property are equal and 
receive equal protection." More detailed legislation that would 
transform the economy from a command system to a market-based 
system was to be dealt with later. 

Other laws concerned the election system. A party assets law 
stipulated that party assets must be paid for exclusively through 
membership fees, state support, and after- tax profits of companies 
and limited companies founded by the parties. All parties repre- 
sented in the National Assembly were to be entitled to state budget 
support: 25 percent of the funds were to be shared equally, while 
75 percent of the funds were to be divided according to the num- 
ber of seats held by each party. The amount of funds would be 
determined by the availability of money in the budget. 



xliii 



According to the new electoral law, the National Assembly to 
be elected in 1990 will have 386 members chosen in a two-part secret 
ballot. One ballot will elect 176 deputies from individual electoral 
districts each having about 350,000 people. Parties and individuals 
nominate candidates for these seats. If no candidate wins a majority 
in a given district, a second round of balloting is held. Those par- 
ties that are able to enter candidates in at least 25 percent of the 
electoral districts in a given county (and in Budapest, which has 
the status of a county) can nominate a party list for that county 
(or for Budapest). In the second ballot, voters will choose a party 
as such, that is, they will cast a ballot for one of the county-level 
lists, from which another 152 deputies will be elected. Parties that 
are able to put forward seven or more of these lists or that win 66 
percent of the vote for the county-level list in any given county 
can enter a slate for the national list of deputies. Fifty-eight deputies 
will be named from the national list; seats will be distributed in 
proportion to the total number of votes secured by losing parties 
on the county-level ballot. However, those parties that fail to win 
at least 4 percent of the votes cast for the county-level lists will not 
qualify for party representation in the National Assembly, although 
their individual members could win seats in the district-level 
elections. 

Approximately one month after the National Assembly enacted 
these momentous changes, the national referendum called for by 
the Alliance of Free Democrats and the Federation of Young 
Democrats was held. The questions on the removal of the HSP 
from the workplace, the nature of the HSP's assets, and the dis- 
banding of the Workers' Guard were moot at this point because 
the National Assembly had already passed laws resolving these 
issues. However, 50.1 percent of those who voted supported the 
proposition that the presidential election should take place after the 
elections to the National Assembly. Subsequently, district elections 
to the National Assembly were set for March 25, 1990. 

Hungary's political transformation during 1989 was reflected in 
military and foreign policy developments. In May Hungary re- 
moved the barbed wire fence that marked the border with Aus- 
tria. In September Hungary proposed establishment of a border 
security zone with Austria and Yugoslavia, as well as a number 
of steps to reduce its military presence along the borders with these 
two countries. Specifically, the proposal called for a fifty-kilometer- 
wide "confidence building zone" on either side of the boundaries 
with Austria and Yugoslavia. The number of tanks in these areas 
would be halved, and Austria and Yugoslavia would be given de- 
tails of Hungary's deployments. Military exercises would be 



xliv 



curtailed, and the Austrians and Yugoslavs would be invited to 
observe any exercises that were held. 

The budget deficit led to defense budget cuts. In 1990 the mili- 
tary budget was to be reduced by 30 percent compared with 1989. 
In addition, the Ministry of Home Affairs — responsible for the 
police and the Border Guards — was to have a 1990 budget of 900 
million forints less than it asked for. Armed forces were to be 
reduced from about 100,000 troops to less than 80,000 troops by 
1991. Also beginning in 1991, military service was to be cut from 
eighteen months to one year. HSP organizations were withdraw- 
ing from the armed forces and attempting to set up organizations 
in residential areas. 

These budget cuts and reductions in force levels were accompa- 
nied by the reorganization of the Ministry of Defense. First, the 
Main Political Administration (see Glossary), which supervised po- 
litical and ideological work in the military, was disbanded. New 
education officers were to work side by side with commanders and 
to train soldiers in civics and educate them about social policy 
problems. Second, some of the functions of the Ministry of Defense 
were transferred to the new "Command of the Hungarian Peo- 
ple's Army," which was to assume responsibility for actual mili- 
tary assignments. A smaller Ministry of Defense continued to 
function, but it had responsibility for military policy and other ad- 
ministrative and theoretical matters only. The minister of defense 
was accountable to the prime minister, and the commander of the 
Hungarian People's Army was responsible to the president, who 
was commander in chief of the armed forces. 

On February 2, 1990, following talks between the Soviet Union 
and Hungary, Moscow agreed to withdraw all of its troops from 
Hungary. The communique that resulted from the talks stated that 
the two sides "agreed that the withdrawal of Soviet troops will be 
carried out on the basis of an intergovernmental agreement to be 
concluded within the shortest possible time." On March 10, 1990, 
Budapest and Moscow signed an agreement for the withdrawal of 
all Soviet forces from Hungary by June 30, 1991 . The withdrawal 
began on March 11, 1990, and two-thirds of Soviet troops and 
equipment were to be removed by the end of 1990. 

In foreign policy, Hungary continued to adhere to its semi- 
independent stance within the Warsaw Pact. In the early 1980s, 
Hungary had attempted to halt the deterioration of relations be- 
tween East and West by seeking constructive relations with the lead- 
ing states of the North Atlantic Treaty Organization (NATO). 
Hungary also attempted to develop relations with some states con- 
sidered pariahs by other members of the Warsaw Pact, notably the 



xlv 



Republic of Korea (South Korea) and Israel, both of which it recog- 
nized in 1989. Moreover, in the late 1980s the Soviet Union also 
liberalized many of its own foreign policy positions in an effort to 
resolve a number of disagreements with Western countries and to 
seek help for its ailing economy. As part of this approach, Moscow 
allowed its East European allies much more leeway in foreign policy 
than it had in the past. Hungary managed to take great advantage 
of this new Soviet approach. 

One of the most significant foreign policy events of the late 1980s 
was the visit of United States president George Bush to Hungary 
from July 11 to 13, 1989. President Bush gave moral and material 
support to Hungary's reform efforts. Four agreements resulted from 
Bush's visit: the Hungarian airline MALEV won approval to fly 
into and out of Los Angeles and Chicago; Hungary gained per- 
mission to open a consular office on the West Coast of the United 
States; the two countries signed an agreement on agricultural 
cooperation; and the two countries signed an agreement for a 
US$750,000 study by the University of Pittsburgh of the financial 
operations of Borsod-Abauj-Zemplen County and its outdated 
steelworks. 

President Bush also agreed to ask other Western countries to help 
Hungary and to request that the United States Congress make 
money available to assist the private sector in Hungary. The ser- 
vices of the United States Peace Corps were also to be made avail- 
able to Hungary. Perhaps most important for Budapest, President 
Bush said he would ask Congress to give most-favored-nation sta- 
tus to Hungary on a permanent rather than on a yearly basis. On 
October 27, the president announced that Hungary would be per- 
petually granted most-favored-nation status. 

Relations with the Soviet Union continued to prosper, as they 
had since Mikhail S. Gorbachev became Soviet leader in March 
1985. Significantly, in 1989 Budapest and Moscow agreed to switch 
to dollar- accounted trade beginning in 1991. Hungary was to pay 
the Soviet Union for its energy and raw materials using dollars 
and applying current Western price rates. Hungary was to receive 
hard currency for its manufactures sold to the Soviet Union. Hun- 
gary would have to compete with Western firms for the Soviet mar- 
ket, but Hungary's leaders believed that such competition would 
help bring their country's industry up to world standards. 

The move to trade in hard currency with the Soviet Union was 
expected to resolve the problem of Hungary's huge trade surplus 
with that country. In the first half of 1989, the surplus amounted 
to 800 million rubles. These rubles were not a convertible currency 
and therefore were of little use to Hungary. The surplus amounted 



xlvi 



to an interest-free loan to the Soviet Union, and the Hungarian 
economy could not afford this burden. 

Hungary had more serious problems with three other Warsaw 
Pact allies — East Germany, Czechoslovakia, and Romania. East 
Germans traveling or vacationing in Hungary used Hungary's open 
border with Austria to flee to that country en route to West Ger- 
many. East Berlin had vociferously protested the Hungarian deci- 
sion to allow the East Germans to leave for Austria. The official 
East German news agency called the decision "an organized trade 
in humans under the pretense of humanitarian considerations." 
However, after the emergence of a reform government in East Ger- 
many and the opening of the Berlin Wall in early November 1989, 
relations between the two countries warmed considerably. 

Relations with Czechoslovakia became problematic when Hun- 
gary suspended work on the Gabokovo-Nagymaros Dam project 
on May 1 3 . The Hungarian government took this action in response 
to public protests over the environmental damage caused by the 
project and in light of a recommendation by a panel of experts that 
the project be abandoned. In turn, Czechoslovakia charged that 
Hungary's suspension of the project was politically motivated and 
a violation of international law. On November 15, Hungary an- 
nounced that the Nagymaros section of the dam "will not be built." 
The new reform government that took power in Czechoslovakia 
in late 1989 was drafting plans to suspend and halt its part of the 
project, which had also raised environmental concerns in that 
country. 

Until the overthrow of Romanian leader Nicolae Ceau§escu in 
late December 1989, Hungary's relations with Romania had 
progressively worsened over the course of the year. The number 
of refugees from Romania who settled in Hungary steadily increased 
in 1989, and, significantly, the number of ethnic Romanians among 
the refugees rose to about 20 percent of the total. 

In an attempt to resolve outstanding problems between the two 
countries, Rezso Nyers, together with Foreign Minister Gyula Horn 
and Prime Minister Miklos Nemeth, met Ceau§escu in Bucharest 
on July 8. The Hungarians sought a radical improvement in the 
treatment of ethnic Hungarians in Romania — the most important 
source of friction between Budapest and Bucharest. The Hungar- 
ians rejected Ceausescu's claim that the nationality issue was strictly 
Romania's internal affair. The Hungarian delegation also called 
for easing travel restrictions between the two countries and appealed 
for a halt to Ceau§escu's plan to raze 7,000 to 8,000 villages and 
relocate their inhabitants in large apartment complexes. The 



xlvii 



meeting produced no result, as Ceausescu again expressed the view 
that he had ''solved" all nationality problems in his country. 

The Romanian government's threats to the lives of Laszlo Tokes, 
an ethnic Hungarian Reformed minister in Timi§oara, Romania, 
and his family initiated the revolution in Romania that brought 
Ceau§escu's ouster and execution in December 1989. In response 
to the violence perpetrated by the Ceau§escu regime on its citizens 
in an effort to stem the popular revolt, the Hungarian government 
took several measures. Hungary called on the United Nations Secu- 
rity Council to involve itself in the Romanian affair. Hungary can- 
celed the 1948 Treaty of Friendship and Cooperation between the 
two countries. Hungary also closed the border between Hungary 
and Romania and formally protested the events in Romania to 
Romanian representatives in Hungary. 

As fighting broke out between the Romanian army, which was 
supporting the revolutionary Council of National Salvation Front, 
and Ceau§escu's secret police organization — the Securitate — 
Hungary extended support to the new regime in Romania. Hun- 
gary was the first foreign government to recognize the Council of 
National Salvation Front as the legitimate government of Roma- 
nia. The Hungarian army maintained constant contact with the 
Romanian army. The radio locator units of the Hungarian army 
established the locations of several secret Securitate radio trans- 
mitters and relayed that information to the Romanian military 
leadership. The Hungarians offered ammunition to the Romanian 
army, but that offer was turned down. Finally, both the Hungar- 
ian government and private citizens and political parties proffered 
food and medical aid to the beleaguered Romanians. 

The revolution in Romania promised an immediate improve- 
ment in relations between Budapest and Bucharest. The new Roma- 
nian government ended the Ceau§escu regime's harsh measures 
against its population, including the notorious resettlement pro- 
gram. The two governments agreed to reopen consulates in the 
Romanian city of Cluj and the Hungarian city of Debrecen and 
to open cultural institutes in Budapest and Bucharest. 

As this account shows, in 1989 and early 1990 Hungary had ex- 
perienced a dizzying series of political changes. Noncommunist po- 
litical parties were poised to assume political power. A number of 
significant steps had been taken to establish the rule of law in Hun- 
gary, although the opposition parties made it clear that this process 
had only just begun. The communist party — in whatever acronymic 
guise — was dwindling in importance. Soviet troops were beginning 
their withdrawal from Hungary. The government was pressing 
toward Hungary's opening to the noncommunist world with vigor 



xlviii 



and determination. Hungary was indeed in the throes of a revolu- 
tion, albeit a peaceful one, accompanied by its Central European 
neighbors on the road to a new political future. 

March 13, 1990 

* * * 

On March 25, 1990, round one of the first free parliamentary 
elections in forty-three years took place in Hungary. In the 152 
district elections, only five candidates succeeded in winning a 
majority. Among the winners was former Prime Minister Miklos 
Nemeth, who ran as an independent. Runoff elections on April 8 
were to decide the outcome of the other 147 district races. 

In balloting for the county-level lists, the Hungarian Democratic 
Forum gained 24.7 percent of the vote, which translated into 40 
seats in the National Assembly. The Alliance of Free Democrats 
won 21 .39 percent of the vote for thirty-four seats, and the Indepen- 
dent Smallholders' Party 1 1 .73 percent for sixteen seats. Other par- 
ties winning the necessary 4 percent threshold for representation 
in the National Assembly were the Hungarian Socialist Party with 
10.89 percent of the vote, the Federation of Young Democrats with 
8.95 percent of the vote, and the Christian Democratic People's 
Party with 6.46 percent of the vote. Among the many parties fail- 
ing to reach the required threshold were the Social Democratic Party 
and the Hungarian Socialist Workers' Party. 

The Hungarian Democratic Forum emerged as the clear win- 
ner after the second round of elections held on April 8 in those 
electoral districts where no candidate gained a majority in the first 
round of voting. The forum gained a total of 164 seats in the Na- 
tional Assembly in the two rounds of voting. Second was the Alli- 
ance of Free Democrats with ninety-two seats. The Hungarian 
Democratic Forum chose to form a government together with the 
Independent Smallholders' Party, which won forty-four seats, and 
the Christian Democratic People's Party, which won twenty-one 
seats. Hence, the governing coalition held 229 seats at about 60 
percent of the 394 total. (On March 1 , the National Assembly had 
added 8 seats to its previous total of 386, 1 each for the country's 
Gypsy, Croatian, Serbian, Romanian, Slovak, Slovenian, German, 
and Jewish minorities. Nominations for these seats were to be pre- 
pared by an interparty committee within the National Assembly 
or by the National Assembly as a whole.) 

The new National Assembly convened for the first time on 
May 2, 1990. At that meeting, it elected Arpad Goncz, a writer 



xlix 



jailed for six years following the Revolution of 1956, as president 
of the National Assembly, which made him interim president of 
the republic. Goncz was actually a founder of the Alliance of Free 
Democrats. In return for the Hungarian Democratic Forum's sup- 
port for Goncz, the Alliance of Free Democrats agreed to support 
a series of amendments to the Constitution that were to secure the 
establishment of "an independent democratic constitutional state" 
in Hungary and provide the legal basis for a market economy. 
Another amendment agreed to by the two parties would require 
only a simple majority in the National Assembly to approve legis- 
lation for all matters except those of the highest political impor- 
tance (such matters included a law on referendums, a nationalities 
law, a citizenship law, legal provisions concerning the freedom of 
conscience and religion, and other issues). The two parties also 
agreed to an amendment according to which the president would 
be elected to a four-year term by the National Assembly rather than 
be elected by the population as a whole. Yet another amendment 
would change the method for the representation of national minori- 
ties in the government and in the National Assembly. 

On May 23, 1990, Jozsef Antall of the Hungarian Democratic 
Forum became the prime minister. Other government ministers 
included Balazs Horvath of the Hungarian Democratic Forum, who 
became minister of the interior; Ferenc Jozsef Nagy of the Indepen- 
dent Smallholders' Party, who became minister of agriculture; Lajos 
Fur of the Hungarian Democratic Forum, who became minister 
of defense; Geza Jeszenszky of the Hungarian Democratic Forum, 
who became minister of foreign affairs; and Peter Akos Bod of the 
Hungarian Democratic Forum, who became minister of trade and 
industry. 

The elections and the formation of a new noncommunist govern- 
ment took place against the backdrop of crisis situations in the econ- 
omy and in foreign relations with Romania. In January 1990, prices 
of meat, poultry, flour, milk and other dairy products, and cook- 
ing fat and oil rose an average of 32 percent; car prices rose 25 
percent; and prices of beer, cigarettes, and gasoline also rose. On 
February 1 , rents for state-owned apartments increased an aver- 
age of 35 percent, while bus and train fares rose 45 percent, and 
railroad fares rose 20 percent. The drastic price increases resulted 
from a reduction in government spending to reduce the budget 
deficit from 50 billion forints in 1989 to 10 billion forints in 1990. 
To meet this objective, the government cut many price subsidies 
and decontrolled most producer prices. 

On March 18 and 19, severe anti-Hungarian violence erupted 
in the Romanian town of Tirgu Mure§. In the clashes between 



1 



Romanians and Hungarians, 3 people died and 269 were injured. 
This violence led to a rapid deterioration of relations between Hun- 
gary and Romania. Prime Minister Miklos Nemeth addressed a 
note of protest to Romanian Prime Minister Petre Roman. Hun- 
garian Foreign Minister Gyula Horn addressed a letter to United 
Nations Secretary General Xavier Peres de Cuellar and to Jan 
Martenson, head of the UN Human Rights Committee, asking 
that the committee mediate the dispute without delay. For its part, 
the Romanian government responded by holding the Hungarian 
government responsible for the bloodshed in Tirgu Mure§, and 
called upon Hungary to refrain from interfering in Romania's in- 
ternal affairs. In response to these charges, the Hungarian govern- 
ment stated that accusations of Hungarian interference were 
unfounded, and that the source of the tragic events lay in the Roma- 
nian government's hesitancy to take resolute action to stem the rise 
of national chauvinism in Romania. The Hungarian government 
called for talks between the two governments on all issues as a means 
to reduce tension. 



May 25, 1990 



Stephen R. Burant 



Chapter 1. Historical Setting 



Refugee writing a letter, Esztergom, 1916 



THE HUNGARIAN PEOPLE'S REPUBLIC emerged in 1949 
after the Hungarian Workers' Party eliminated its rivals and as- 
sumed control of the state. Soviet control of Eastern Europe after 
World War II had enabled a minuscule communist party lacking 
popular support to gain power in the country and gradually 
eliminate its political rivals. Under Matyas Rakosi, the party con- 
solidated its control and radically transformed the country econom- 
ically, socially, and politically. 

In the mid-1950s, after the Soviet Union had somewhat relaxed 
its control of Eastern Europe, Hungarian society began to mobi- 
lize against the regime, culminating in the Revolution of 1956. 
Soviet troops crushed the rebellion, leaving power in the hands of 
Janos Kadar. After consolidating his authority, Kadar embarked 
on a program of economic reform in the mid-1960s. 

Like other countries of Eastern Europe, Hungary has a history 
of class, religious, and ethnic conflicts that were intensified and 
sometimes decided by the actions of larger, more powerful neigh- 
bors. Beginning in the tenth century, German and Bohemian mis- 
sionaries converted the Magyars. In the early eleventh century, 
Bavarian knights helped Stephen I eliminate rivals and quash 
peasant revolts. Siileyman the Magnificent 's Ottoman armies con- 
quered and partitioned the country with the Habsburgs in the six- 
teenth century, expediting the spread of Protestant faiths. Habsburg 
rulers colonized Hungary with non-Magyars, repressed its Pro- 
testants, stifled its economic development, and attempted to Ger- 
manize its people. The Entente powers carved up Hungary after 
World War I and distributed most of the land to new nation- states. 
Finally, dictator Joseph Stalin enforced Soviet domination over post- 
war Hungary. 

Despite internal divisions, strong foreign influence, and outright 
attempts to force the Hungarians to assimilate into other cultures, 
Hungarian nationalism has thrived throughout the nineteenth and 
twentieth centuries. Nationalism drove Hungary to ally itself with 
Nazi Germany to regain territories lost after World War I. Na- 
tionalism also inspired Hungarians to revolt against the Stalinist 
political order in October 1956. 

Early History 

The Hungarian nation traces its history to the Magyars, a pagan 
Finno-Ugric tribe that arose in central Russia and spoke a language 



3 



Hungary: A Country Study 

that evolved into modern Hungarian. Historians dispute the exact 
location of the early Magyars' original homeland, but it is likely 
to be an area between the Volga River and the Ural Mountains. 
In ancient times, the Magyars probably lived as nomadic tent- 
dwelling hunters and fishers. Some scholars argue that they en- 
gaged in agriculture beginning in the second millennium B.C. 

Before the fifth century A.D., the Magyars' ancestors gradually 
migrated southward onto the Russian steppes, where they wan- 
dered into the lands near the Volga River bend, at present-day 
Kazan', as nomadic herders. Later, probably under pressure from 
hostile tribes to the east, they migrated to the area between the 
Don and lower Dnepr rivers. There they lived close to, and perhaps 
were dominated by, the Bui gar-Turks from about the fifth to the 
seventh century. During this period, the Magyars became a semi- 
sedentary people who lived by raising catde and sheep, planting 
crops, and fishing. The Bulgar-Turkish influence on the Magyars 
was significant, especially in agriculture. Most Hungarian words 
dealing with agriculture and animal husbandry have Turkic roots. 
By contrast, the etymology of the word Hungary has been traced 
to a Slavicized form of the Turkic words on ogur, meaning ' 'ten 
arrows," which may have referred to the number of Magyar tribes. 

The Magyars lived on lands controlled by the Khazars (a Turkish 
people whose realm stretched from the lower Volga and the 
lower Don rivers to the Caucasus) from about the seventh to the 
ninth century, when they freed themselves from Khazar rule. The 
Khazars attempted to reconquer the Magyars both by themselves 
and with the help of the Pechenegs, another Turkish tribe. This 
tribe drove the Magyars from their homes westward to lands be- 
tween the Dnepr and lower Danube rivers in 889. In 895 the 
Magyars joined Byzantine armies under Emperor Leo VI in a war 
against the Bulgars. However, the Bulgars emerged victorious. 
Their allies, the Pechenegs, attacked the weakened Magyars and 
forced them westward yet again in 895 or 896. This migration took 
the Magyars over the Carpathian Mountains and into the basin 
drained by the Danube and Tisza rivers, a region that corresponds 
roughly to present-day Hungary. Romans, Goths, Huns, Slavs, 
and other peoples had previously occupied the region, but at the 
time of the Magyar migration, the land was inhabited only by a 
sparse population of Slavs, numbering about 200,000. 

Tradition holds that the Magyar clan chiefs chose a chieftain 
named Arpad to lead the migration and that they swore by sip- 
ping from a cup of their commingled blood to accept Arpad' s male 
descendants as the Magyars' hereditary chieftains. The Magyars 
probably knew of the lands in the Carpathian Basin because from 



4 



Historical Setting 



892 to 894 Magyar mercenaries had fought there for King Arnulph 
of East Francia in a struggle with the king of Moravia. Estimates 
are that about 400,000 people made up the exodus, in seven 
Magyar, one Kabar, and other smaller tribes. 

The Carpathian Basin and parts of Transylvania south- southwest 
of the basin had been settled for thousands of years before the 
Magyars' arrival. A rich Bronze Age culture thrived there until 
horsemen from the steppes destroyed it in the middle of the thir- 
teenth century B.C. Celts later occupied parts of the land, and in 
the first century A.D. the Romans conquered and divided it be- 
tween the imperial provinces of Pannonia and Dacia. In the fourth 
century, the Goths ousted the Romans, and Attila the Hun later 
made the Carpathian Basin the hub of his short-lived empire. There- 
after, Avars, Bulgars, Germans, and Slavs settled the region. In 
the late ninth century A.D. , only scattered settlements of Slavs oc- 
cupied the Carpathian Basin. The Magyar forces, light cavalry- 
men who used Central Asian- style bows, quickly conquered the 
Slavs, whom they either assimilated or enslaved. 

Romanian and Hungarian historians disagree about the ethnicity 
of Transylvania's population before the Magyars' arrival. The 
Romanians establish their claims to Transylvania by arguing that 
their Latin ancestors inhabited Transylvania and survived there 
through the Dark Ages. The Hungarians, by contrast, maintain 
that Transylvania was inhabited not by the ancestors of the Roma- 
nians but by Slavs and point out that the first mention of the Roma- 
nians' ancestors in Hungarian records, which appeared in the 
thirteenth century, described them as drifting herders. 

Medieval Period 

In the four centuries after their migration into the Carpathian 
Basin, the Magyars gradually developed from a loose confedera- 
tion of pagan marauders into a recognized kingdom. This king- 
dom, which became known as Hungary, was led by the Arpad 
Dynasty and was firmly allied to the Christian West. Eventually 
the Arpad line died out, however, and Hungary again descended 
into anarchy, with the most powerful nobles vying for control. 

Christianization of the Magyars 

The bonds linking the seven Magyar tribes grew frail soon after 
the migration into the Carpathian Basin. At that time, Europe was 
weak and disunited, and for more than half a century Magyar bands 
raided Bavaria, Moravia, Italy, Constantinople, and lands as far 
away as the Pyrenees. Sometimes fighting as mercenaries and some- 
times lured by spoils alone, the Magyar bands looted towns and 



5 



Hungary: A Country Study 



took captives for labor, ransom, or sale on the slave market. The 
Byzantine emperor and European princes paid the Magyars an- 
nual tribute. In 955, however, German and Czech armies under 
the Holy Roman Empire's King Otto I destroyed a Magyar force 
near Augsburg. The defeat effectively ended Magyar raids on the 
West, and in 970 the Byzantines halted Magyar incursions toward 
the East. 

Fearing a war of extermination, Chieftain Geza (972-97), Arpad's 
great-grandson, assured Otto II that the Magyars had ceased their 
raids and asked him to send missionaries. Otto complied, and in 
975 Geza and a few of his kinsmen were baptized into the Roman 
Catholic Church. Geza consented to baptism more out of political 
necessity than conviction. He continued to offer sacrifices to the 
pagan gods and reportedly bragged that he "was rich enough for 
two gods." From this time, however, missionaries began the gradual 
process of converting and simultaneously westernizing the Magyar 
tribes. Geza used German knights and his position as chief of the 
Magyars' largest clan to restore strong central authority over the 
other clans. Hungary's ties with the West were strengthened in 
996 when Geza's son, Stephen, who was baptized as a child and 
educated by Saint Adalbert of Prague, married Gisela, a Bavarian 
princess and sister of Emperor Henry II. 

Stephen I 

Stephen (997-1038) became chieftain when Geza died, and he 
consolidated his rule by ousting rival clan chiefs and confiscating 
their lands. Stephen then asked Pope Sylvester II to recognize him 
as king of Hungary. The pope agreed, and legend says Stephen 
was crowned on Christmas Day in the year 1000. The crowning 
legitimized Hungary as a Western kingdom independent of the Holy 
Roman and Byzantine empires. It also gave Stephen virtually ab- 
solute power, which he used to strengthen the Roman Catholic 
Church and Hungary. Stephen ordered the people to pay tithes 
and required every tenth village to construct a church and sup- 
port a priest. Stephen donated land to support bishoprics and 
monasteries, required all persons except the clergy to marry, and 
barred marriages between Christians and pagans. Foreign monks 
worked as teachers and introduced Western agricultural methods. 
A Latin alphabet was devised for the Magyar (Hungarian) 
language. 

Stephen administered his kingdom through a system of coun- 
ties, each governed by an ispdn, or magistrate, appointed by the 
king. In Stephen's time, Magyar society had two classes: the free- 
men nobles and the unfree. The nobles were descended in the male 



6 




St. Stephen 
Courtesy Sam and Sarah Stulberg 



7 



Hungary: A Country Study 

line from the Magyars who had either migrated into the Carpathian 
Basin or had received their tide of nobility from the king. Only 
nobles could hold office or present grievances to the king. They 
paid tithes and owed the crown military service but were exempt 
from taxes. The unfree — who had no political voice — were slaves, 
freed slaves, immigrants, or nobles stripped of their privileges. Most 
were serfs who paid taxes to the king and a part of each harvest 
to their lord for use of his land. The king had direct control of the 
unfree, thus checking the nobles' power. 

Clan lands, crown lands, and former crown lands made up the 
realm. Clan lands belonged to nobles, who could will the lands to 
family members or the church; if a noble died without an heir, 
his land reverted to his clan. Crown lands consisted of Stephen's 
patrimony, lands seized from disloyal nobles, conquered lands, and 
unoccupied parts of the kingdom. Former crown lands were proper- 
ties granted by the king to the church or to individuals. 

Politics and Society under Stephen's Successors 

Stephen died in 1038 and was canonized in 1083. Despite pagan 
revolts and a series of succession struggles after his death, Hun- 
gary grew stronger and expanded (see fig. 2). Transylvania was 
conquered and colonized with Magyars, Szekels (a tribe related 
to the Magyars), and German Saxons in the eleventh and twelfth 
centuries. In 1090 Laszlo I (1077-95) occupied Slavonia, and in 
1103 Kalman I (1095-1116) assumed the title of king of Croatia. 
Croatia was never assimilated into Hungary; rather, it became an 
associate kingdom administered by a ban, or civil governor. 

The eleventh and twelfth centuries were relatively peaceful, and 
Hungary slowly developed a feudal economy. Crop production 
gradually supplemented stock breeding, but until the twelfth cen- 
tury planting methods remained crude because tillers farmed each 
plot until it was exhausted, then moved on to fresh land. Gold, 
silver, and salt mining boosted the king's revenues. Despite the 
minting of coins, catde remained the principal medium of exchange. 
Towns began developing when an improvement in agricultural 
methods and the clearing of additional land produced enough sur- 
plus to support a class of full-time craftsmen. By the reign of Bela 
III (1173-96), Hungary was one of the leading powers in 
southeastern Europe, and in the thirteenth century Hungary's 
nobles were trading gold, silver, copper, and iron with western 
Europe for luxury goods. 

Until the end of the twelfth century, the king's power remained 
paramount in Hungary. He was the largest landowner, and in- 
come from the crown lands nearly equaled the revenues generated 



3 



Historical Setting 



from mines, customs, tolls, and the mint. In the thirteenth cen- 
tury, however, the social structure changed, and the crown's ab- 
solute power began to wane. As the crown lands became a less 
important source of royal revenues, the king found it expedient 
to make land grants to nobles to ensure their loyalty. King Andrew 
II (1205-35), a profligate spender on foreign military adventures 
and domestic luxury, made huge land grants to nobles who fought 
for him. These nobles, many of whom were foreign knights, soon 
made up a class of magnates whose wealth and power far outstripped 
that of the more numerous, and predominantly Magyar, lesser 
nobles. When Andrew tried to meet burgeoning expenses by rais- 
ing the serfs' taxes, thereby indirectly slashing the lesser nobles' 
incomes, the lesser nobles rebelled. In 1222 they forced Andrew 
to sign the Golden Bull, which limited the king's power, declared 
the lesser nobles (all free men not included among the great Barons 
or magnates) legally equal to the magnates, and gave them the right 
to resist the king's illegal acts. The lesser nobles also began to present 
Andrew with grievances, a practice that evolved into the institu- 
tion of the parliament, or Diet. 

Andrew IPs son Bela IV (1235-79) tried with little success to 
reestablish royal preeminence by reacquiring lost crown lands. His 
efforts, however, created a deep rift between the crown and the 
magnates just as the Mongols were sweeping westward across Rus- 
sia toward Europe. Aware of the danger, Bela ordered the mag- 
nates and lesser nobles to mobilize. Few responded, and the 
Mongols routed Bela's army at Mohi on April 11, 1241 . Bela fled 
first to Austria, where Duke Frederick of Babenberg held him for 
ransom, then to Dalmatia. The Mongols reduced Hungary's towns 
and villages to ashes and slaughtered half the population before 
news arrived in 1242 that the Great Khan Ogotai had died in 
Karakorum. The Mongols withdrew, sparing Bela and what re- 
mained of his kingdom. 

Reconstruction 

Bela realized that reconstruction would require the magnates' 
support, so he abandoned his attempts to recover former crown 
lands. Instead, he granted crown lands to his supporters, reor- 
ganized the army by replacing light archers with heavy cavalry, 
and granted the magnates concessions to redevelop their lands and 
construct stone-and-mortar castles that would withstand enemy 
sieges. Bela repopulated the country with a wave of immigrants, 
transforming royal castles into towns and populating them with 
Germans, Italians, and Jews. Mining began anew, farming methods 
improved, and crafts and commerce developed in the towns. After 



9 




10 



Historical Setting 



Bela's reconstruction program, the magnates, with their new for- 
tifications, emerged as Hungary's most powerful political force. 
However, by the end of the thirteenth century, they were fighting 
each other and carving out petty principalities. 

King Bela IV died in 1270, and the Arpad line expired in 1301 
when Andrew III, who strove with some success to limit the mag- 
nates' power, unexpectedly died without a male heir. Anarchy 
characterized Hungary as factions of magnates vied for control. 

Renaissance and Reformation 

After the Arpad Dynasty ended, Hungary's nobles chose a series 
of foreign kings who reestablished strong royal authority. Hun- 
gary and the adjacent countries prospered for several centuries as 
Central Europe experienced an era of peace interrupted only by 
succession struggles. But over time, the onslaughts of the Turks 
and the strife of the Reformation weakened Hungary, and the coun- 
try was eventually partitioned by the Turks and the Habsburgs. 

Golden Era 

Hungary's first two foreign kings, Charles Robert and Louis I 
of the House of Anjou, ruled during one of the most glorious periods 
in the country's history. Central Europe was at peace, and Hun- 
gary and its neighbors prospered. Charles Robert (1308-42) won 
the protracted succession struggle after Andrew Ill's death. An 
Arpad descendant in the female line, Charles Robert was crowned 
as a child and raised in Hungary. He reestablished the crown's 
authority by ousting disloyal magnates and distributing their estates 
to his supporters. Charles Robert then ordered the magnates to 
recruit and equip small private armies called banderia. Charles 
Robert ruled by decree and convened the Diet only to announce 
his decisions. Dynastic marriages linked his family with the ruling 
families of Naples and Poland and heightened Hungary's stand- 
ing abroad. Under Charles Robert, the crown regained control of 
Hungary's mines, and in the next two centuries the mines produced 
more than a third of Europe's gold and a quarter of its silver. 
Charles Robert also introduced tax reforms and a stable currency. 
Charles Robert's son and successor Louis I (1342-82) maintained 
the strong central authority Charles Robert had amassed. In 1351 
Louis issued a decree that reconfirmed the Golden Bull, erased all 
legal distinctions between the lesser nobles and the magnates, stan- 
dardized the serfs' obligations, and barred the serfs from leaving 
the lesser nobles' farms to seek better opportunities on the mag- 
nates' estates. The decree also established the entail system (see 
Glossary). Hungary's economy continued to flourish during Louis's 



11 



Hungary: A Country Study 



reign. Gold and other precious metals poured from the country's 
mines and enriched the royal treasury, foreign trade increased, new 
towns and villages arose, and craftsmen formed guilds. The 
prosperity fueled a surge in cultural activity, and Louis promoted 
the illumination of manuscripts and in 1367 founded Hungary's 
first university. Abroad, however, Louis fought several costly wars 
and wasted time, funds, and lives in failed attempts to gain for 
his nephew the throne of Naples. While Louis was engaged in these 
activities, the Turks made their initial inroads into the Balkans. 
Louis became king of Poland in 1370 and ruled the two countries 
for twelve years. 

Sigismund (1387-1437), Louis's son-in-law, won a bitter strug- 
gle for the throne after Louis died in 1382. Under Sigismund, Hun- 
gary's fortunes began to decline. Many Hungarian nobles despised 
Sigismund for his cruelty during the succession struggle, his long 
absences, and his costly foreign wars. In 1401 disgruntled nobles 
temporarily imprisoned the king. In 1403 another group crowned 
an anti-king, who failed to solidify his power but succeeded in sell- 
ing Dalmatia to Venice. Sigismund failed to reclaim the territory. 
Sigismund became the Holy Roman Emperor in 1410 and king 
of Bohemia in 1419, thus requiring him to spend long periods 
abroad and enabling Hungary's magnates to acquire unprecedented 
power. In response, Sigismund created the office of palatine (see 
Glossary) to rule the country in his stead. Like earlier Hungarian 
kings, Sigismund elevated his supporters to magnate status and 
sold off crown lands to meet burgeoning expenses. Although Hun- 
gary's economy continued to flourish, Sigismund' s expenses out- 
stripped his income. He bolstered royal revenues by increasing the 
serfs' taxes and requiring cash payment. Social turmoil erupted 
late in Sigismund' s reign as a result of the heavier taxes and renewed 
magnate pressure on the lesser nobles. Hungary's first peasant revolt 
erupted when a Transylvanian bishop ordered peasants to pay tithes 
in coin rather than in kind. The revolt was quickly checked, but 
it prompted Transylvania's Szekel, Magyar, and German nobles 
to form the Union of Three Nations, which was an effort to de- 
fend their privileges against any power except that of the king. 

Additional turmoil erupted when the Ottoman Turks expanded 
their empire into the Balkans. They crossed the Bosporus Straits 
in 1352, subdued Bulgaria in 1388, and defeated the Serbs at 
Kosovo Polje in 1389. Sigismund led a crusade against them in 
1396, but the Ottomans routed his forces at Nicopolis, and he barely 
escaped with his life. Tamerlane's invasion of Anatolia in 1402-03 
slowed the Turks' progress for several decades, but in 1437 Sultan 
Murad prepared to invade Hungary. Sigismund died the same year, 



12 




Mdtyds Corvinus 
Courtesy Kenneth Nyirddy 




and Hungary's next two kings, Albrecht V of Austria (1437-39) 
and Wladyslaw III of Poland (1439-44), who was known in Hun- 
gary as Ulaszlo I, both died during campaigns against the Turks. 

After Ulaszlo, Hungary's nobles chose an infant king, Laszlo V, 
and a regent, Janos Hunyadi, to rule the country until Laszlo V 
came of age. The son of a lesser nobleman of the Vlach tribe, 
Hunyadi rose to become a general, Transylvania's military gover- 
nor, one of Hungary's largest landowners, and a war hero. He 
used his personal wealth and the support of the lesser nobles to 
win the regency and overcome the opposition of the magnates. 
Hunyadi then established a mercenary army funded by the first 
tax ever imposed on Hungary's nobles. He defeated the Ottoman 
forces in Transylvania in 1442 and broke their hold on Serbia in 
1443, only to be routed at Varna (where Laszlo V himself perished) 
a year later. In 1456, when the Turkish army besieged Belgrade, 
Hunyadi defeated it in his greatest and final victory. Hunyadi died 
of the plague soon after. 

Some magnates resented Hunyadi for his popularity as well as 
for the taxes he imposed, and they feared that his sons might seize 
the throne from Laszlo. They coaxed the sons to return to Laszlo 's 
court, where Hunyadi 's elder son was beheaded. His younger son, 
Matyas, was imprisoned in Bohemia. However, lesser nobles loyal 
to Matyas soon expelled Laszlo. After Laszlo' s death abroad, they 
paid ransom for Matyas, met him on the frozen Danube River, 



13 



Hungary: A Country Study 

and proclaimed him king. Known as Matyas Corvinus (1458-90), 
he was, with one possible exception (Janos Zapolyai), the last Hun- 
garian king to rule the country. 

Although Matyas regularly convened the Diet and expanded the 
lesser nobles' powers in the counties, he exercised absolute rule 
over Hungary by means of a secular bureaucracy. Matyas enlisted 
30,000 foreign mercenaries in his standing army and built a net- 
work of fortresses along Hungary's southern frontier, but he did 
not pursue his father's aggressive anti-Turkish policy. Instead, 
Matyas launched unpopular attacks on Bohemia, Poland, and Aus- 
tria, pursuing an ambition to become Holy Roman Emperor and 
arguing that he was trying to forge a unified Western alliance strong 
enough to expel the Turks from Europe. He eliminated tax ex- 
emptions and raised the serfs' obligations to the crown to fund his 
court and the military. The magnates complained that these mea- 
sures reduced their incomes, but despite the stiffer obligations, the 
serfs considered Matyas a just ruler because he protected them from 
excessive demands and other abuses by the magnates. He also 
reformed Hungary's legal system and promoted the growth of Hun- 
gary's towns. Matyas was a true renaissance man and made his 
court a center of humanist culture; under his rule, Hungary's first 
books were printed and its second university was established. 
Matyas's library, the Corvina, was famous throughout Europe. 
In his quest for the imperial throne, Matyas eventually moved to 
Vienna, where he died in 1490. 

Reign of Ul£szl<5 II and Louis II 

Matyas's reforms did not survive the turbulent decades that fol- 
lowed his reign. An oligarchy of quarrelsome magnates gained con- 
trol of Hungary. They crowned a docile king, Vladislav Jagiello 
(the Jagiellonian king of Bohemia, who was known in Hungary 
as Ulaszlo II, 1490-1516), only on condition that he abolish the 
taxes that had supported Matyas's mercenary army. As a result, 
the king's army dispersed just as the Turks were threatening Hun- 
gary. The magnates also dismantled Matyas's administration and 
antagonized the lesser nobles. In 1492 the Diet limited the serfs' 
freedom of movement and expanded their obligations. Rural dis- 
content boiled over in 1514 when well-armed peasants under 
Gyorgy Dozsa rose up and attacked estates across Hungary. United 
by a common threat, the magnates and lesser nobles eventually 
crushed the rebels. Dozsa and other rebel leaders were executed 
in a most brutal manner. 

Shocked by the peasant revolt, the Diet of 1514 passed laws that 
condemned the serfs to eternal bondage and increased their work 



14 



Historical Setting 



obligations. Corporal punishment became widespread, and one 
noble even branded his serfs like livestock. The legal scholar Stephen 
Werboczy included the new laws in his Tripartitum of 1514, which 
made up Hungary's legal corpus until the revolution of 1848. The 
Tripartitum gave Hungary's king and nobles, or magnates, equal 
shares of power: the nobles recognized the king as superior, but 
in turn the nobles had the power to elect the king. The Triparti- 
tum also freed the nobles from taxation, obligated them to serve 
in the military only in a defensive war, and made them immune 
from arbitrary arrest. The new laws weakened Hungary by deepen- 
ing the rift between the nobles and the peasantry just as the Turks 
prepared to invade the country. 

When Ulaszlo II died in 1516, his ten-year-old son Louis II 
(1516-26) became king, but a royal council appointed by the Diet 
ruled the country. Hungary was in a state of near anarchy under 
the magnates' rule. The king's finances were a shambles; he bor- 
rowed to meet his household expenses despite the fact that they 
totaled about one-third of the national income. The country's 
defenses sagged as border guards went unpaid, fortresses fell into 
disrepair, and initiatives to increase taxes to reinforce defenses were 
stifled. In 1521 Sultan Suleyman the Magnificent recognized Hun- 
gary's weakness and seized Belgrade in preparation for an attack 
on Hungary. In August 1526, he marched more than 100,000 
troops into Hungary's heartland, and at Mohacs they cut down 
all but several hundred of the 25,000 ill-equipped soldiers whom 
Louis II had been able to muster for the country's defense. Louis 
himself died, thrown from a horse into a bog. 

After Louis's death, rival factions of Hungarian nobles simul- 
taneously elected two kings, Janos Zapolyai (1526-40) and Ferdi- 
nand (1526-64). Each claimed sovereignty over the entire country 
but lacked sufficient forces to eliminate his rival. Zapolyai, a Hun- 
garian and the military governor of Transylvania, was recognized 
by the sultan and was supported mostly by lesser nobles opposed 
to new foreign kings. Ferdinand, the first Habsburg to occupy 
the Hungarian throne, drew support from magnates in western 
Hungary who hoped he could convince his brother, Holy Roman 
Emperor Charles V, to expel the Turks. In 1538 George Martinuzzi, 
Zapolyai' s adviser, arranged a treaty between the rivals that would 
have made Ferdinand sole monarch upon the death of the then- 
childless Zapolyai. The deal collapsed when Zapolyai married and 
fathered a son. Violence erupted, and the Turks seized the oppor- 
tunity, conquering the city of Buda and then partitioning the coun- 
try in 1541. 



15 



Hungary: A Country Study 

Partition of Hungary 

The partition of Hungary between the Ottoman and Habsburg 
empires lasted more than 150 years. Habsburg Austria controlled 
Royal Hungary, which consisted of counties along the Austrian 
border and some of northwestern Croatia (see fig. 3). The Otto- 
mans annexed central and southern Hungary. Transylvania be- 
came an Ottoman vassal state, where native princes, who paid the 
Turks tribute, ruled with considerable autonomy. After the Hun- 
garian defeat at Mohacs, the Protestant Reformation took hold in 
Hungary. Initially, German burghers in Transylvania and Royal 
Hungary adopted Lutheranism; later, John Calvin's works con- 
verted many Magyars in Transylvania and central Hungary. The 
Reformation spread quickly, and by the early seventeenth century 
hardly any noble families remained Catholic. Archbishop Peter 
Pazmany reorganized Royal Hungary's Roman Catholic Church 
and led a Counter- Reformation that reversed the Protestants' gains 
in Royal Hungary, using persuasion rather than intimidation. 
Transylvania, however, remained a Protestant stronghold. The 
Reformation caused rifts between Catholic Magyars, who often 
sided with the Habsburgs, and Protestant Magyars, who developed 
a strong national identity and became rebels in Austrian eyes. 
Chasms also developed between Royal Hungary and Transylvania 
and between the mostiy Catholic magnates and the mainly Pro- 
testant lesser nobles. 

Royal Hungary 

Royal Hungary became a small part of the Habsburg Empire 
and enjoyed little influence in Vienna. The Habsburg king directly 
controlled Royal Hungary's financial, military, and foreign affairs, 
and imperial troops guarded its borders. The Habsburgs avoided 
filling the office of palatine to prevent the holder's amassing too 
much power. In addition, the so-called Turkish question divided 
the Habsburgs and the Hungarians: Vienna wanted to maintain 
peace with the Turks; the Hungarians wanted the Ottomans ousted. 
As the Hungarians recognized the weakness of their position, many 
became anti-Habsburg. They complained about foreign rule, the 
behavior of foreign garrisons, and the Habsburgs' recognition of 
Turkish sovereignty in Transylvania. Protestants, who were per- 
secuted in Royal Hungary, considered the Counter-Reformation 
a greater menace than the Turks, however. 

Ottoman Hungary 

Central Hungary became a province of the Ottoman Empire 
ruled by pashas living in Buda. The Turks' only interest was to 



16 



Historical Setting 



secure their hold on the territory. The Sublime Porte (a term used 
to designate the Ottoman rulers) became the sole landowner and 
managed about 20 percent of the land for its own benefit, appor- 
tioning the rest among soldiers and civil servants. The new land- 
lords were interested mainly in squeezing as much wealth from 
the land as quickly as possible. Wars, slave-taking, and the emi- 
gration of nobles who lost their land depopulated much of the 
countryside. However, the Turks practiced religious tolerance and 
allowed the Hungarians living within the empire significant 
autonomy in internal affairs. Towns maintained some self- 
government, and a prosperous middle class developed through 
artisanry and trade. 

Transylvania 

Transylvania, an Ottoman vassal state, functioned for many 
years as an independent country. In 1542 Martinuzzi revived the 
1437 Union of Three Nations to govern the land, and the Tran- 
sylvanian nobles regularly met in their own Diet. In 1572 the Diet 
created freedom of worship and equal political rights for members 
of Transylvania's four "established" religions: Roman Catholic, 
Lutheran, Unitarian, and Calvinist. The Eastern Orthodox Roma- 
nian serfs were permitted to worship, but the Orthodox Church 
was not recognized as an "established" religion, and the Roma- 
nians did not share political equality. 

In 1591 the Habsburgs invaded Transylvania under George 
Basta, who persecuted Protestants and expropriated estates illegally 
until Istvan Bocskay, a former Habsburg supporter, mustered an 
army that expelled Basta' s forces in 1604-05. In 1606 Bocskay con- 
cluded the Peace of Vienna with the Habsburgs and the Peace of 
Zsitvatorok with the Turks. The treaties secured his position as 
prince of Transylvania, guaranteed rights for Royal Hungary's Pro- 
testants, broadened Transylvania's independence, and freed the 
emperor of his obligation to pay tribute to the Ottomans. After 
Bocskay' s death, the Ottomans compelled the Transylvanians to 
accept Gabor Bethlen as prince. Transylvania prospered under 
Bethlen's enlightened despotism. He stimulated agriculture, trade, 
and industry; sank new mines; sent students to Protestant univer- 
sities abroad; and prohibited landlords from barring children of 
serfs from an education. Unfortunately, when Bethlen died in 1629, 
the Transylvanian Diet abolished most of his reforms. After a short 
succession struggle, Gyorgy Rakoczi I (1648-60) became prince. 
Under Rakoczi, Transylvania fought with the Protestants in the 
Thirty Years' War (1618-48) and was mentioned as a sovereign 
state in the Peace of Westphalia. Transylvania's golden age ended 



17 



Hungary: A Country Study 




18 



Historical Setting 



after Gyorgy Rakoczi II (1648-60) launched an attack on Poland 
without the prior approval of the Ottomans or Transylvania's Diet. 
The campaign was a disaster, and the Turks used the opportunity 
to rout Rakoczi 's army and take control of Transylvania. 

End of the Partition 

The Ottoman Empire gradually weakened after Suleyman's 
death in 1559. The Ottoman occupation of Hungary continued, 
however, not so much because of the Turks' strength but because 
of the West's disunity and lack of resolve. Hungarian nobles grew 
impatient with the Habsburgs' persecution of Protestants and reluc- 
tance to take steps to drive out the Turks. Their discontent ex- 
ploded after the Habsburg imperial army routed a Turkish force 
at St. Gotthard in 1664. Instead of pressing for concessions, Em- 
peror Leopold I (1657-1705) concluded the Treaty of Vasvar in 
which he conceded to the Turks more Hungarian territory than 
they had ever possessed. After Vasvar, even many Catholic mag- 
nates turned against the Habsburgs. 

After a failed Hungarian plot to throw off Habsburg rule, 
Leopold suppressed the Hungarian constitution, subjected Royal 
Hungary to direct absolute rule from Vienna, and harshly repressed 
Hungarian Protestants, handing over Protestant ministers who 
refused to deny their faith to work as galley slaves. Hungarian dis- 
content deepened. In 1681 Imre Thokoly, a Transylvanian noble- 
man, led a rebellion against the Habsburgs and forced Leopold 
I to convoke the Diet and restore Hungary's constitution and the 
office of palatine. Sensing weakness, the Turks made their strike 
against Austria, but Polish forces routed them near Vienna in 1683. 
A Western campaign then gradually drove the Turks from Hun- 
gary, and the sultan surrendered almost all of his Hungarian and 
Croatian possessions in the Peace of Karlowitz in 1699. 

Hungary under the Habsburgs 

The Habsburgs ruled autocratically on almost all questions ex- 
cept taxation and relegated Hungary to the status of a colony, a 
factor that, together with other factors, stifled economic develop- 
ment. After more than a century of stagnation, the lesser nobles, 
under increasing economic pressure and prompted by nascent Hun- 
garian nationalism, pressed for reform. The crescendo of discon- 
tent climaxed in the March 1848 revolution. Russian troops quashed 
the rebellion, enabling Austrian emperor Franz Joseph to impose 
absolute control for almost two decades. 

Reign of Leopold II 

As the Habsburgs gained control of the country, the ministers 



19 



Hungary: A Country Study 



of Leopold I argued that he should rule Hungary as conquered 
territory. One even said Vienna should first make the Hungarians 
beggars, then Catholics, and then Germans. At the Diet of Press- 
burg in 1687, the emperor promised to observe all of Hungary's 
laws and privileges. Hereditary succession of the Habsburgs was 
recognized, however, and the nobles' right of resistance was 
abrogated. In 1690 Leopold began redistributing lands freed from 
the Turks. Protestant nobles and all other Hungarians thought dis- 
loyal by the Habsburgs lost their estates, which were given to 
foreigners. Vienna controlled Hungary's foreign affairs, defense, 
tariffs, and other functions, and it separated Transylvania from 
Hungary, treating it as a separate imperial territory. 

The repression of Protestants and the land seizures embittered 
the Hungarians, and in 1703 a peasant uprising sparked an eight- 
year national rebellion aimed at casting off the Habsburg yoke. 
Disgruntled Protestants, peasants, and soldiers united under Ferenc 
Rakoczi, a Roman Catholic magnate who could hardly speak Hun- 
garian. Most of Hungary soon supported Rakoczi, and the joint 
Hungarian-Transylvanian Diet voted to annul the Habsburgs' right 
to the throne. Fortunes turned against the rebels, however, when 
the Habsburgs made peace in the West and turned their full force 
against Hungary. The rebellion ended in 1711, when moderate 
rebel leaders concluded the Treaty of Szatmar, in which the Hun- 
garians gained little except the emperor's agreement to reconvene 
the Diet and to grant an amnesty for the rebels. 

Reign of Charles VI and Maria Theresa 

Leopold's successor, Charles VI (1711-40), began building a 
workable relationship with Hungary after the Treaty of Szatmar. 
Charles needed the Hungarian Diet's approval for the Pragmatic 
Sanction, under which the Habsburg monarch was to rule Hun- 
gary not as emperor but as a king subject to the restraints of Hun- 
gary's constitution and laws. He hoped that the Pragmatic Sanction 
would keep the Habsburg Empire intact if his daughter, Maria 
Theresa, succeeded him. The Diet approved the Pragmatic Sanc- 
tion in 1723, and Hungary thus agreed to became a hereditary 
monarchy under the Habsburgs for as long as their dynasty existed. 
In practice, however, Charles and his successors governed almost 
autocratically, controlling Hungary's foreign affairs, defense, and 
finance but lacking the power to tax the nobles without their ap- 
proval. The Habsburgs also maintained Transylvania's separation 
from Hungary. 

Charles organized Hungary's first modern, centralized admin- 
istration and in 1715 established a standing army under his 



20 



Historical Setting 



command, which was entirely funded and manned by the nonnoble 
population. This policy reduced the nobles' military obligation 
without abrogating their exemption from taxation. Charles also 
banned conversion to Protestantism, required civil servants to 
profess Catholicism, and forbade Protestant students to study 
abroad. 

Maria Theresa (1740-80) faced an immediate challenge from 
Prussia's Frederick II when she became head of the House of Habs- 
burg. In 1741 she appeared before the Hungarian Diet holding 
her newborn son and entreated Hungary's nobles to support her. 
They stood behind her and helped secure her rule. Maria Theresa 
later took measures to reinforce links with Hungary's magnates. 
She established special schools to attract Hungarian nobles to 
Vienna. During her reign, the members of the magnate class lost 
their Hungarian national identity, including their knowledge of 
the Hungarian language. 

Under Charles and Maria Theresa, Hungary experienced fur- 
ther economic decline. Centuries of Ottoman occupation, rebel- 
lion, and war had reduced Hungary's population drastically, and 
large parts of the country's southern half were almost deserted. 
A labor shortage developed as landowners restored their estates. 
In response, the Habsburgs began to colonize Hungary with large 
numbers of peasants from all over Europe, especially Slovaks, Serbs, 
Croatians, and Germans. Many Jews also immigrated from Vienna 
and the empire's Polish lands near the end of the century. Hun- 
gary's population more than tripled to 8 million between 1720 and 
1787. However, only 39 percent of its people were Magyars, who 
lived mainly in the center of the country. 

A complex patchwork of minority peoples emerged in the lands 
along Hungary's periphery. Droves of Romanians entered Tran- 
sylvania during the same period. The Protestant and Catholic Hun- 
garians and Germans who had been there for years had considered 
the Orthodox Romanians inferior and relegated them to serfdom. 
In the eighteenth century, leaders of the Orthodox Church began 
arguing that Romanians were descendants of the Roman Dacians 
and thus Transylvania's original inhabitants. The Orthodox leaders 
demanded, without success, that the Romanians be recognized as 
Transylvania's fourth "nation" and the Orthodox Church as its 
fifth "established" religion. 

In the early to mid-eighteenth century, Hungary had a primi- 
tive agricultural economy that employed 90 percent of the popula- 
tion. The nobles failed to use fertilizers, roads were poor and rivers 
blocked, and crude storage methods caused huge losses of grain. 
Barter had replaced money transactions, and little trade existed 



21 



Hungary: A Country Study 



between towns and the serfs. After 1760 a labor surplus developed. 
The serf population grew, pressure on the land increased, and the 
serfs' standard of living declined. Landowners began making greater 
demands on new tenants and began violating existing agreements. 
In response, Maria Theresa issued her Urbarium of 1767 to pro- 
tect the serfs by restoring their freedom of movement and limiting 
the corvee (see Glossary). Despite her efforts and several periods 
of strong demand for grain, the situation worsened. Between 1767 
and 1848, many serfs left their holdings. Most became landless farm 
workers because a lack of industrial development meant few op- 
portunities for work in the towns. 

Enlightened Absolutism 

Joseph II (1780-90), a dynamic leader strongly influenced by 
the Enlightenment, shook Hungary from its malaise when he in- 
herited the throne from his mother, Maria Theresa. Joseph sought 
to centralize control of the empire and to rule it by decree as an 
enlightened despot. He refused to take the Hungarian coronation 
oath to avoid being constrained by Hungary's constitution. In 1781 
Joseph issued the Patent of Toleration, which granted Protestants 
and Orthodox Christians full civil rights and Jews freedom of wor- 
ship. He decreed that German replace Latin as the empire's offi- 
cial language and granted the peasants the freedom to leave their 
holdings, to marry, and to place their children in trades. Hungary, 
Croatia, and Transylvania became a single imperial territory under 
one administration. When the Hungarian nobles again refused to 
waive their exemption from taxation, Joseph banned imports of 
Hungarian manufactured goods into Austria and began a survey 
to prepare for imposition of a general land tax. 

Joseph's reforms outraged Hungary's nobles and clergy, and the 
country's peasants grew dissatisfied with taxes, conscription, and 
requisitions of supplies. Hungarians perceived Joseph's language 
reform as German cultural hegemony, and they reacted by insist- 
ing on the right to use their own tongue. As a result, Hungarian 
lesser nobles sparked a renaissance of the Magyar language and 
culture, and a cult of national dance and costume flourished. The 
lesser nobles questioned the loyalty of the magnates, of whom less 
than half were ethnic Magyars, and even those had become French- 
and German- speaking courtiers. The Magyar national reawaken- 
ing subsequently triggered national revivals among the Slovak, 
Romanian, Serbian, and Croatian minorities within Hungary and 
Transylvania who felt threatened by both German and Magyar 
cultural hegemony. These national revivals later blossomed into 



22 



Historical Setting 



the nationalist movements of the nineteenth and twentieth centuries 
that contributed to the empire's ultimate collapse. 

Late in his reign, Joseph led a costly, ill-fated campaign against 
the Turks that weakened his empire. On January 28, 1790, three 
weeks before his death, the emperor issued a decree canceling all 
of his reforms except the Patent of Toleration, peasant reforms, 
and abolition of the religious orders. 

Joseph's successor, Leopold II (1790-92), recognized Hungary 
again as a separate country under a Habsburg king and reestab- 
lished Croatia and Transylvania as separate territorial entities. In 
1791 the Diet passed Law X, which stressed Hungary's status as 
an independent kingdom ruled only by a king legally crowned 
according to Hungarian laws. Law X became the basis for demands 
by Hungarian reformers for statehood in the period from 1825 to 
1849. New laws again required approval of both the Habsburg king 
and the Diet, and Latin was restored as the official language. The 
peasant reforms remained in effect, however, and Protestants 
remained equal before the law. Leopold died in March 1792 just 
as the French Revolution was about to degenerate into the Reign 
of Terror and send shock waves through the royal houses of Europe. 

Enlightened absolutism ended in Hungary under Leopold's suc- 
cessor, Francis I (1792-1835), who developed an almost abnormal 
aversion to change, bringing Hungary decades of political stagna- 
tion. In 1795 the Hungarian police arrested an abbot and several 
of the country's leading thinkers for plotting a Jacobin kind of revo- 
lution to install a radical democratic, egalitarian political system 
in Hungary. Thereafter, Francis resolved to extinguish any spark 
of reform that might ignite revolution. The execution of the al- 
leged plotters silenced any reform advocates among the nobles, and 
for about three decades reform ideas remained confined to poetry 
and philosophy. The magnates, who also feared that the influx of 
revolutionary ideas might precipitate a popular uprising, became 
a tool of the crown and seized the chance to further burden the 
peasants. 

Economic and Social Developments 

By the turn of the nineteenth century, the aim of Hungary's 
agricultural producers had shifted from subsistence farming and 
small-scale production for local trade to cash-generating, large-scale 
production for a wider market. Road and waterway improvements 
cut transportation costs, while urbanization in Austria, Bohemia, 
and Moravia and the need for supplies for the Napoleonic wars 
boosted demand for foodstuffs and clothing. Hungary became a 
major grain and wool exporter. New lands were cleared, and yields 



23 



Hungary: A Country Study 

rose as farming methods improved. Hungary did not reap the full 
benefit of the boom, however, because most of the profits went to 
the magnates, who considered them not as capital for investment 
but as a means of adding luxury to their lives. As expectations rose, 
goods such as linen and silverware, once considered luxuries, be- 
came necessities. The wealthy magnates had little trouble balanc- 
ing their earnings and expenditures, but many lesser nobles, fearful 
of losing their social standing, went into debt to finance their 
spending. 

Napoleon's final defeat brought recession. Grain prices collapsed 
as demand dropped, and debt ensnared much of Hungary's lesser 
nobility. Poverty forced many lesser nobles to work to earn a liveli- 
hood, and their sons entered education institutions to train for civil 
service or professional careers. The decline of the lesser nobility 
continued despite the fact that by 1820 Hungary's exports had sur- 
passed wartime levels. As more lesser nobles earned diplomas, the 
bureaucracy and professions became saturated, leaving a host of 
disgruntied graduates without jobs. Members of this new intelligen- 
tsia quickly became enamored of radical political ideologies emanat- 
ing from Western Europe and organized themselves to effect 
changes in Hungary's political system. 

Francis rarely called the Diet into session (usually only to re- 
quest men and supplies for war) without hearing complaints. Eco- 
nomic hardship brought the lesser nobles' discontent to a head by 
1825, when Francis finally convoked the Diet after a fourteen-year 
hiatus. Grievances were voiced, and open calls for reform were 
made, including demands for less royal interference in the nobles' 
affairs and for wider use of the Hungarian language. 

The first great figure of the reform era came to the fore during 
the 1825 convocation of the Diet. Count Istvan Szechenyi, a mag- 
nate from one of Hungary's most powerful families, shocked the 
Diet when he delivered the first speech in Hungarian ever uttered 
in the upper chamber and backed a proposal for the creation of 
a Hungarian academy of arts and sciences by pledging a year's 
income to support it. In 1831 angry nobles burned Szechenyi 's book 
Hitel (Credit), in which he argued that the nobles' privileges were 
both morally indefensible and economically detrimental to the 
nobles themselves. Szechenyi called for an economic revolution and 
argued that only the magnates were capable of implementing re- 
forms. Szechenyi favored a strong link with the Habsburg Empire 
and called for abolition of entail and serfdom, taxation of land- 
owners, financing of development with foreign capital, establish- 
ment of a national bank, and introduction of wage labor. He 
inspired such projects as the construction of the suspension bridge 



24 



The National Library, Budapest 
Courtesy Scott Edelman 



linking Buda and Pest. Szechenyi's reform initiatives ultimately 
failed because they were targeted at the magnates, who were not 
inclined to support change, and because the pace of his program 
was too slow to attract disgruntled lesser nobles. 

The most popular of Hungary's great reform leaders, Lajos 
Kossuth, addressed passionate calls for change to the lesser nobles. 
Kossuth was the son of a landless, lesser nobleman of Protestant 
background. He practiced law with his father before moving to Pest. 
There he published commentaries on the Diet's activities, which 
made him popular with young, reform-minded people. Kossuth 
was imprisoned in 1836 for treason. After his release in 1840, he 
gained quick notoriety as the editor of a liberal party newspaper. 
Kossuth argued that only political and economic separation from 
Austria would improve Hungary's plight. He called for broader 
parliamentary democracy, industrialization, general taxation, eco- 
nomic expansion through exports, and abolition of privileges and 
serfdom. But Kossuth was also a Magyar chauvinist whose rhetoric 
provoked the strong resentment of Hungary's minority ethnic 
groups. Kossuth gained support among liberal lesser nobles, who 
constituted an opposition minority in the Diet. They sought re- 
forms with increasing success after Francis's death in 1835 and the 



25 



Hungary: A Country Study 

succession of Ferdinand V (1835-48). In 1843 a law was enacted 
making Hungarian the country's official language over the strong 
objections of the Croats, Slovaks, Serbs, and Romanians. 

The Revolution of March 1848 

In March 1848, revolution erupted in Vienna, forcing Austria's 
Chancellor Klemens von Metternich to flee the capital. Unrest broke 
out in Hungary on March 15, when radicals and students stormed 
the Buda fortress to release political prisoners. A day later, the Diet's 
liberal-dominated lower house demanded establishment of a na- 
tional government responsible to an elected parliament, and on 
March 22 a new national cabinet took power with Count Louis 
Batthyany as chairman, Kossuth as minister of finance, and 
Szechenyi as minister of public works. Under duress, the Diet's 
upper house approved a sweeping reform package, signed by 
Ferdinand, that altered almost every aspect of Hungary's economic, 
social, and political life. These so-called April Laws created indepen- 
dent Hungarian ministries of defense and finance, and the new 
government claimed the right to issue currency through its own 
central bank. Guilds lost their privileges; the nobles became sub- 
ject to taxation; entail, tithes, and the corvee were abolished; some 
peasants became freehold proprietors of the land they worked; free- 
dom of the press and assembly were created; a Hungarian national 
guard was established; and Transylvania was brought under Hun- 
garian rule. 

The non-Magyar ethnic groups in Hungary feared the nation- 
alism of the new Hungarian government, and Transylvanian Ger- 
mans and Romanians opposed the incorporation of Transylvania 
into Hungary. The Vienna government enlisted the minorities in 
the first attempt to overthrow the Hungarian government. Josip 
Jelacic — a fanatic anti-Hungarian — became governor of Croatia 
on March 22 and severed relations with the Hungarian govern- 
ment a month later. By summer the revolution's momentum be- 
gan to wane. The Austrians ordered the Hungarian Diet to dissolve, 
but the order went unheeded. In September Jelacic led an army 
into Hungary. Batthyany resigned, and a mob lynched the imperial 
commander in Pest. A committee of national defense under Kossuth 
took control, authorized the establishment of a Hungarian army, 
and issued paper money to fund it. On October 30, 1848, imperial 
troops entered Vienna and suppressed a workers' uprising, effec- 
tively ending the revolution everywhere in the empire except 
Hungary, where Kossuth's army had overcome Jelacic 's forces. 
In December Ferdinand abdicated in favor of Franz Joseph 
(1848-1916), who claimed more freedom of action because, unlike 



26 



Historical Setting 



Ferdinand, he had given no pledge to respect the April Laws. The 
Magyars, however, refused to recognize him as their king because 
he was never crowned. 

The imperial army captured Pest early in 1849, but the revolu- 
tionary government remained entrenched in Debrecen. In April 
a "rump" Diet deposed the Habsburg Dynasty in Hungary, 
proclaimed Hungary a republic, and named Kossuth governor with 
dictatorial powers. After the declaration, Austrian reinforcements 
were transferred to Hungary, and in June, at Franz Joseph's re- 
quest, Russian troops attacked from the east and overwhelmed the 
Hungarians. The Hungarian army surrendered on August 13, and 
Kossuth escaped to the Ottoman Empire. A period of harsh repres- 
sion followed. Batthyany and about 100 others were shot, several 
society women were publicly whipped, and the government out- 
lawed public gatherings, theater performances, display of the na- 
tional colors, and wearing of national costumes and Kossuth-style 
beards. 

Aftermath of the Revolution 

After the revolution, the emperor revoked Hungary's constitution 
and assumed absolute control. Franz Joseph divided the coun- 
try into four distinct territories: Hungary, Transylvania, Croatia- 
Slavonia, and Vojvodina. German and Bohemian administrators 
managed the government, and German became the language of 
administration and higher education. The non-Magyar minorities 
of Hungary received little for their support of Austria during the 
turmoil. A Croat reportedly told a Hungarian: "We received as 
a reward what the Magyars got as a punishment." 

Hungarian public opinion split over the country's relations with 
Austria. Some Hungarians held out hope for full separation from 
Austria; others wanted an accommodation with the Habsburgs, 
provided that they respected Hungary's constitution and laws. 
Ferencz Deak became the main advocate for accommodation. Deak 
upheld the legality of the April Laws and argued that their amend- 
ment required the Hungarian Diet's consent. He also held that 
the dethronement of the Habsburgs was invalid. As long as Aus- 
tria ruled absolutely, Deak argued, Hungarians should do no more 
than passively resist illegal demands. 

The first crack in Franz Joseph's neo-absolutist rule developed 
in 1859, when the forces of Sardinia and France defeated Austria 
at Solferno. The defeat convinced Franz Joseph that national and 
social opposition to his government was too strong to be managed 
by decree from Vienna. Gradually he recognized the necessity of 
concessions toward Hungary, and Austria and Hungary thus moved 



27 



Hungary: A Country Study 

toward a compromise. In 1866 the Prussians defeated the Austrians, 
further underscoring the weakness of the Habsburg Empire. Negoti- 
ations between the emperor and the Hungarian leaders were in- 
tensified and finally resulted in the Compromise of 1867, which 
created the Dual Monarchy of Austria- Hungary, also known as 
the Austro- Hungarian Empire. 

Dual Monarchy 

The Compromise of 1867, which created the Dual Monarchy, 
gave the Hungarian government more control of its domestic af- 
fairs than it had possessed at any time since the Battle of Mohacs 
(see fig. 4). However, the new government faced severe economic 
problems and the growing restiveness of ethnic minorities. World 
War I led to the disintegration of Austria-Hungary, and in the after- 
math of the war, a series of governments — including a communist 
regime — assumed power in Budapest (in 1872 the cities of Buda 
and Pest united to become Budapest). 

Constitutional and Legal Framework 

Once again a Habsburg emperor became king of Hungary, but 
the compromise strictly limited his power over the country's in- 
ternal affairs, and the Hungarian government assumed control over 
its domestic affairs. The Hungarian government consisted of a 
prime minister and cabinet appointed by the emperor but respon- 
sible to a bicameral parliament elected by a narrow franchise. Joint 
Austro- Hungarian affairs were managed through "common" 
ministries of foreign affairs, defense, and finance. The respective 
ministers were responsible to delegations representing separate 
Austrian and Hungarian parliaments. Although the "common" 
ministry of defense administered the imperial and royal armies, 
the emperor acted as their commander in chief, and German re- 
mained the language of command in the military as a whole. The 
compromise determined that commercial and monetary policy, 
tariffs, the railroad, and indirect taxation were "common" con- 
cerns to be negotiated every ten years. The compromise also 
returned Transylvania, Vojvodina, and the military frontier to 
Hungary's jurisdiction. 

At Franz Joseph's insistence, Hungary and Croatia reached a simi- 
lar compromise in 1868, giving the Croats a special status in Hun- 
gary. The agreement granted the Croats autonomy over their internal 
affairs. The Croatian ban would now be nominated by the Hun- 
garian prime minister and appointed by the king. Areas of 
"common" concern to Hungarians and Croats included finance, 
currency matters, commercial policy, the post office, and the railroad. 



28 



Historical Setting 



Croatian became the official language of Croatia's government, 
and Croatian representatives discussing "common" affairs before 
the Hungarian Diet were permitted to speak Croatian. 

The Nationalities Law enacted in 1868 defined Hungary as a 
single nation comprising different nationalities whose members en- 
joyed equal rights in all areas except language. Although non- 
Hungarian languages could be used in local government, churches, 
and schools, Hungarian became the official language of the cen- 
tral government and universities. Many Hungarians thought the 
act too generous, while minority- group leaders rejected it as in- 
adequate. Slovaks in northern Hungary, Romanians in Transyl- 
vania, and Serbs in Vojvodina all wanted more autonomy, and 
unrest followed the act's passage. The government took no fur- 
ther action concerning nationalities, and discontent rose. 

Anti-Semitism appeared in Hungary early in the century as a 
result of fear of economic competition. In 1840 a partial emanci- 
pation of the Jews allowed them to live anywhere except certain 
depressed mining cities. The Jewish Emancipation Act of 1868 gave 
Jews equality before the law and effectively eliminated all bars to 
their participation in the economy; nevertheless, informal barriers 
kept Jews from careers in politics and public life. 

Rise of the Liberal Party 

Franz Joseph appointed Gyula Andrassy — a member of Deak's 
party — prime minister in 1867. His government strongly favored 
the Compromise of 1867 and followed a laissez-faire economic pol- 
icy. Guilds were abolished, workers were permitted to bargain for 
wages, and the government attempted to improve education and 
construct roads and railroads. Between 1850 and 1875, Hungary's 
farms prospered: grain prices were high, and exports tripled. But 
Hungary's economy accumulated capital too slowly, and the 
government relied heavily on foreign credits. In addition, the na- 
tional and local bureaucracies began to grow immediately after the 
compromise became effective. Soon the cost of the bureaucracy 
outpaced the country's tax revenues, and the national debt soared. 
After an economic downturn in the mid- 1870s, Deak's party suc- 
cumbed to charges of financial mismanagement and scandal. 

As a result of these economic problems, Kalman Tisza's Lib- 
eral Party, created in 1875, gained power that same year. Tisza 
assembled a bureaucratic political machine that maintained con- 
trol through corruption and manipulation of a woefully unrepresen- 
tative electoral system. In addition, Tisza's government had to 
withstand both dissatisfied nationalities and Hungarians who 
thought Tisza too submissive to the Austrians. The Liberals argued 



29 



Hungary: A Country Study 




Historical Setting 



that the Dual Monarchy improved Hungary's economic position 
and enhanced its influence in European politics. 

Tisza's government raised taxes, balanced the budget within 
several years of coming to power, and completed large road, rail- 
road, and waterway projects. Commerce and industry expanded 
quickly. After 1880 the government abandoned its laissez-faire eco- 
nomic policies and encouraged industry with loans, subsidies, 
government contracts, tax exemptions, and other measures. The 
number of Hungarians who earned their living in industry dou- 
bled to 24.2 percent of the population between 1890 and 1910, while 
the number dependent on agriculture dropped from 82 to 62 per- 
cent. However, the 1880s and 1890s were depression years for the 
peasantry. Rail and steamship transport gave North American 
farmers access to European markets, and Europe's grain prices fell 
by 50 percent. Large landowners fought the downturn by seeking 
trade protection and other political remedies; the lesser nobles, 
whose farms failed in great numbers, sought positions in the still- 
burgeoning bureaucracy. By contrast, the peasantry resorted to 
subsistence farming and worked as laborers to earn money. 

Social Changes 

Hungary's population rose from 13 million to 20 million between 
1850 and 1910. After 1867 Hungary's feudal society gave way to 
a more complex society that included the magnates, lesser nobles, 
middle class, working class, and peasantry. However, the mag- 
nates continued to wield great influence through several conser- 
vative parties because of their massive wealth and dominant position 
in the upper chamber of the parliament. They fought moderniza- 
tion and sought both closer ties with Vienna and a restoration of 
Hungary's traditional social structure and institutions, arguing that 
agriculture should remain the mission of the nobility. They won 
protection from the market by reestablishment of a system of en- 
tail and also pushed for restriction of middle-class profiteering and 
restoration of corporal punishment. The Roman Catholic Church 
was a major ally of the magnates. 

Some lesser-noble landowners survived the agrarian depression 
of the late nineteenth century and continued farming. Many others 
turned to the bureaucracy or to the professions. 

In the mid- 1800s, Hungary's middle class consisted of a small 
number of German and Jewish merchants and workshop owners 
who employed a few craftsmen. By the turn of the century, however, 
the middle class had grown in size and complexity and had be- 
come predominantiy Jewish. In fact, Jews created the modern econ- 
omy that supported Tisza's bureaucratic machine. In return, Tisza 



31 



Hungary: A Country Study 

not only denounced anti-Semitism but also used his political 
machine to check the growth of an anti-Semitic party. In 1896 his 
successors passed legislation securing the Jews' final emancipation. 
By 1910 about 900,000 Jews made up approximately 5 percent of 
the population and about 23 percent of Budapest's citizenry. Jews 
accounted for 54 percent of commercial business owners, 85 per- 
cent of financial institution directors and owners, and 62 percent 
of all employees in commerce. 

The rise of a working class came naturally with industrial de- 
velopment. By 1900 Hungary's mines and industries employed 
nearly 1.2 million people, representing 13 percent of the popula- 
tion. The government favored low wages to keep Hungarian 
products competitive on foreign markets and to prevent im- 
poverished peasants from flocking to the city to find work. The 
government recognized the right to strike in 1884, but labor came 
under strong political pressure. In 1890 the Social Democratic Party 
was established and secretiy formed alliances with the trade unions. 
The party soon enlisted one-third of Budapest's workers. By 1900 
the party and union rolls listed more than 200,000 hard-core mem- 
bers, making it the largest secular organization the country had 
ever known. The Diet passed laws to improve the lives of indus- 
trial workers, including providing medical and accident insurance, 
but it refused to extend them voting rights, arguing that broaden- 
ing the franchise would give too many non- Hungarians the vote 
and threaten Hungarian domination. After the Compromise of 
1867, the Hungarian government also launched an education re- 
form in an effort to create a skilled, literate labor force. As a result, 
the literacy rate had climbed to 80 percent by 1910. Literacy raised 
the expectations of workers in agriculture and industry and made 
them ripe for participation in movements for political and social 
change. 

The plight of the peasantry worsened drastically during the 
depression at the end of the nineteenth century. The rural popu- 
lation grew, and the size of the peasants' farm plots shrank as land 
was divided up by successive generations. By 1900 almost half of 
the country's landowners were scratching out a living from plots 
too small to meet basic needs, and many farm workers had no land 
at all. Many peasants chose to emigrate, and their departure rate 
reached approximately 50,000 annually in the 1870s and about 
200,000 annually by 1907. The peasantry's share of the popula- 
tion dropped from 72.5 percent in 1890 to 68.4 percent in 1900. 
The countryside also was characterized by unrest, to which the 
government reacted by sending in troops, banning all farm-labor 
organizations, and passing other repressive legislation. 



32 



The 1896 Millennial Monument in Budapest 
Courtesy Robert Lisbeth 

In the late nineteenth century, the Liberal Party passed laws that 
enhanced the government's power at the expense of the Roman 
Catholic Church. The parliament won the right to veto clerical ap- 
pointments, and it reduced the church's nearly total domination 
of Hungary's education institutions. Additional laws eliminated 
the church's authority over a number of civil matters and, in the 
process, introduced civil marriage and divorce procedures. 

The Liberal Party also worked with some success to create a uni- 
fied, Magyarized state. Ignoring the Nationalities Law, it enacted 
laws that required the Hungarian language to be used in local govern- 
ment and increased the number of school subjects taught in that 
language. After 1890 the government succeeded in Magyarizing edu- 
cated Slovaks, Germans, Croats, and Romanians and co-opting them 
into the bureaucracy, thus robbing the minority nationalities of an 
educated elite. Most minorities never learned to speak Hungarian, 
but the education system made them aware of their political rights, 
and their discontent with Magyarization mounted. Bureaucratic pres- 
sures and heightened fears of territorial claims against Hungary after 
the creation of new nation-states in the Balkans forced Tisza to oudaw 
"national agitation" and to use electoral legerdemain to deprive the 
minorities of representation. Nevertheless, in 1901 Romanian and 
Slovak national parties emerged undaunted by incidents of electoral 
violence and police repression. 



33 



Hungary: A Country Study 



Political and Economic Life, 1905-19 

Tisza directed the Liberal government until 1890, and for four- 
teen years thereafter a number of Liberal prime ministers held 
office. Agricultural decline continued, and the bureaucracy could 
no longer absorb all of the pauperized lesser nobles and educated 
people who could not find work elsewhere. This group gave its po- 
litical support to the Party of Independence and the Party of Forty- 
Eight, which became part of the "national" opposition that forced 
a coalition with the Liberals in 1905. The Party of Independence 
resigned itself to the existence of the Dual Monarchy and sought 
to enhance Hungary's position within it; the Party of Forty-Eight, 
however, deplored the Compromise of 1867, argued that Hungary 
remained an Austrian colony, and pushed for formation of a Hun- 
garian national bank and an independent customs zone. 

Franz Joseph refused to appoint members of the coalition to the 
government until they renounced their demands for concessions 
from Austria concerning the military. When the coalition finally 
gained power in 1906, the leaders retreated from their opposition 
to the Compromise of 1867 and followed the Liberal Party's eco- 
nomic policies. Istvan Tisza — Kalman Tisza' s son and prime 
minister from 1903 to 1905 — formed the new Party of Work, which 
in 1910 won a large majority in the parliament. Tisza became prime 
minister for a second time in 1912 after labor strife erupted over 
an unsuccessful attempt to expand voting rights. 

World War I 

On June 28, 1914, a Bosnian Serb assassinated Archduke Franz 
Ferdinand, heir to the Austrian throne. Within days Austria- 
Hungary presented Serbia with an ultimatum that made war in- 
evitable. Tisza initially opposed the ultimatum but changed his 
mind when Germany supported Austria- Hungary. By late August, 
all the great European powers were at war. Bands playing mili- 
tary music and patriotic demonstrators expecting a quick, easy vic- 
tory took to Budapest's streets after the declaration of war. 
However, Hungary, was ill prepared to fight. The country's ar- 
maments were obsolete, and its industries were not prepared for 
a war economy. 

In 1915 and 1916, Hungary felt the full impact of the war. In- 
flation ran rampant, wages were frozen, food shortages developed, 
and the government banned export of grain even to Austria. Franz 
Joseph died in 1916, and Karl IV (1916-18) became Hungary's 
new king. Before being crowned, however, Karl insisted that 
Hungarians have expanded voting rights. Tisza resigned in 



34 



Historical Setting 



response. By 1917 the Hungarian government was slowly losing 
domestic control in the face of mounting popular dissatisfaction 
caused by the war. Of the 3.6 million soldiers Hungary sent to war, 
2.1 million became casualties. By late 1918, Hungary's farms and 
factories were producing only half of what they did in 1913, and 
the war- weary people had abandoned hope of victory. 

On October 31, 1918, smoldering unrest burst into revolution 
in Budapest, and roving soldiers assassinated Istvan Tisza. Pres- 
sured by the popular uprising and the refusal of Hungarian 
troops to quell disturbances, King Karl was compelled to appoint 
the "Red Count," Mihaly Karolyi, a pro-Entente liberal and leader 
of the Party of Independence, to the post of prime minister. 
Chrysanthemum-waving crowds poured into the streets shouting 
their approval. Karolyi formed a new cabinet, whose members were 
drawn from the new National Council, composed of representa- 
tives of the Party of Independence, the Social Democratic Party, 
and a group of bourgeois radicals. After suing for a separate peace, 
the new government dissolved the parliament, pronounced Hun- 
gary an independent republic with Karolyi as provisional presi- 
dent, and proclaimed universal suffrage and freedom of the press 
and assembly. The government launched preparations for land re- 
form and promised elections, but neither goal was carried out. On 
November 13, 1918, Karl IV surrendered his powers as king of 
Hungary; however, he did not abdicate, a technicality that made 
a return to the throne possible. 

The Karolyi government's measures failed to stem popular dis- 
content, especially when the Entente powers began distributing slices 
of Hungary's traditional territory to Romania, Yugoslavia, and 
Czechoslovakia. The new government and its supporters had pinned 
their hopes for maintaining Hungary's territorial integrity on aban- 
doning Austria and Germany, securing a separate peace, and ex- 
ploiting Karolyi 's close connections in France. The Entente, 
however, chose to consider Hungary a partner in the defeated Dual 
Monarchy and dashed the Hungarians' hopes with the delivery 
of each new diplomatic note demanding surrender of more land. 
On March 19, 1919, the French head of the Entente mission in 
Budapest handed Karolyi a note delineating final postwar bound- 
aries, which were unacceptable to all Hungarians. Karolyi resigned 
and turned power over to a coalition of Social Democrats and com- 
munists, who promised that Soviet Russia would help Hungary 
restore its original borders. Although the Social Democrats held 
a majority in the coalition, the communists under Bela Kun im- 
mediately seized control and announced the establishment of the 
Hungarian Soviet Republic. 



35 



Hungary: A Country Study 



Hungarian Soviet Republic 

The rise of the Hungarian Communist Party (HCP) to power 
was swift. The party was organized in a Moscow hotel on Novem- 
ber 4, 1918, when a group of Hungarian prisoners of war and com- 
munist sympathizers formed a Central Committee and dispatched 
members to Hungary to recruit new members, propagate the party's 
ideas, and radicalize Karolyi's government. By February 1919, the 
party numbered 30,000 to 40,000 members, including many 
unemployed ex- soldiers, young intellectuals, and Jews. In the same 
month, Kun was imprisoned for incitement to riot, but his popular- 
ity skyrocketed when a journalist reported that he had been beaten 
by the police. Kun emerged from jail triumphant when the Social 
Democrats handed power to a government of ''People's Com- 
missars," who proclaimed the Hungarian Soviet Republic on 
March 21, 1919. 

The communists wrote a temporary constitution guaranteeing 
freedom of speech and assembly; free education; language and cul- 
tural rights to minorities; and other rights. It also provided for 
suffrage for people over eighteen years of age except clergy, "former 
exploiters," and certain others. Single-list elections took place in 
April, but members of the parliament were selected indirectly by 
popularly elected committees. On June 25, Kun's government 
proclaimed a dictatorship of the proletariat, nationalized industrial 
and commercial enterprises, and socialized housing, transport, 
banking, medicine, cultural institutions, and all landholdings of 
more than 40.5 hectares. Kun undertook these measures even 
though the Hungarian communists were relatively few, and the 
support they enjoyed was based far more on their program to re- 
store Hungary's borders than on their revolutionary agenda. Kun 
hoped that the Soviet Russian government would intervene on Hun- 
gary 's behalf and believed that a worldwide workers' revolution 
was imminent. In an effort to secure its rule in the interim, the 
communist government resorted to arbitrary violence. Revolution- 
ary tribunals ordered about 590 executions, including some for 
"crimes against the revolution." The government also used "red 
terror" to expropriate grain from peasants. This violence and the 
regime's moves against the clergy also shocked many Hungarians. 

In late May, Kun attempted to fulfill his promise to restore Hun- 
gary's borders. The Hungarian Red Army marched northward and 
reoccupied part of Slovakia. Despite initial military success, 
however, Kun withdrew his troops about three weeks later when 
the French threatened to intervene. This concession shook his 
popular support. Kun then unsuccessfully turned the Hungarian 



36 



Historical Setting 



Red Army on the Romanians, who broke through Hungarian lines 
on July 30, occupied and looted Budapest, and ousted Kun's Soviet 
Republic on August 1, 1919. Kun fled first to Vienna and then 
to Soviet Russia, where he was executed during Stalin's terror 
against foreign communists in the late 1930s. 

Counterrevolution 

A militantiy anticommunist authoritarian government composed 
of military officers entered Budapest on the heels of the Romani- 
ans. A "white terror" ensued that led to the imprisonment, tor- 
ture, and execution without trial of communists, socialists, Jews, 
leftist intellectuals, sympathizers with the Karolyi and Kun regimes, 
and others who threatened the traditional Hungarian political order 
that the officers sought to reestablish. Estimates placed the num- 
ber of executions at approximately 5,000. In addition, about 75,000 
people were jailed. In particular, the Hungarian right wing and 
the Romanian forces targeted Jews for retribution. Ultimately, the 
white terror forced nearly 100,000 people to leave the country, most 
of them socialists, intellectuals, and middle-class Jews. 

Trianon Hungary 

After World War I, a conservative government ruled Hungary 
and made some progress toward economic modernization. The 
Great Depression, however, brought economic collapse, and the 
country's mood shifted to the far right. An alliance with Nazi Ger- 
many resulted, and Hungary fought on the Axis side in World War 
II. Again Hungary experienced defeat, and the country was oc- 
cupied by the Soviet Red Army. 

Postwar Political and Economic Conditions 

In 1920 and 1921, internal chaos racked Hungary. The white 
terror continued to plague Jews and leftists, unemployment and 
inflation soared, and penniless Hungarian refugees poured across 
the border from neighboring countries and burdened the floun- 
dering economy. The government offered the population littie suc- 
cor. In January 1920, Hungarian men and women cast the first 
secret ballots in the country's political history and elected a large 
counterrevolutionary and agrarian majority to a unicameral parlia- 
ment. Two main political parties emerged: the socially conserva- 
tive Christian National Union and the Smallholders' Party, which 
advocated land reform. In March the parliament annulled both 
the Pragmatic Sanction of 1723 and the Compromise of 1867, 
and it restored the Hungarian monarchy but postponed electing 
a king until civil disorder had subsided. Instead, Miklos Horthy 



37 



Hungary: A Country Study 



(1920-44) — a former commander in chief of the Austro- Hungarian 
navy — was elected regent and was empowered, among other things, 
to appoint Hungary's prime minister, veto legislation, convene or 
dissolve the parliament, and command the armed forces. 

Hungary's signing of the Treaty of Trianon on June 4, 1920, 
ratified the country's dismemberment, limited the size of its armed 
forces, and required reparations payments. The territorial provi- 
sions of the treaty, which ensured continued discord between Hun- 
gary and its neighbors, required the Hungarians to surrender more 
than two-thirds of their prewar lands (see fig. 5). Romania acquired 
Transylvania; Yugoslavia gained Croatia, Slavonia, and Vojvo- 
dina; Slovakia became a part of Czechoslovakia; and Austria also 
acquired a small piece of prewar Hungarian territory. Hungary 
lost about 60 percent of its prewar population, and about one-third 
of the 10 million ethnic Hungarians found themselves outside the 
diminished homeland. The country's ethnic composition was left 
almost homogeneous. Hungarians constituted about 90 percent of 
the population, Germans made up about 6 to 8 percent, and Slo- 
vaks, Croats, Romanians, Jews, and other minorities accounted 
for the remainder. 

New international borders separated Hungary's industrial base 
from its sources of raw materials and its former markets for agricul- 
tural and industrial products. Its new circumstances forced Hun- 
gary to become a trading nation. Hungary lost 84 percent of its 
timber resources, 43 percent of its arable land, and 83 percent of 
its iron ore. Because most of the country's prewar industry was 
concentrated near Budapest, Hungary retained about 51 percent 
of its industrial population, 56 percent of its industry, 82 percent 
of its heavy industry, and 70 percent of its banks. 

Bethlen Government 

Horthy appointed Pal Teleki prime minister in July 1920. His 
right-wing government set quotas effectively limiting admission of 
Jews to universities, legalized corporal punishment, and, to quiet 
rural discontent, took initial steps toward fulfilling a promise of major 
land reform by dividing about 385,000 hectares from the largest es- 
tates into smallholdings. Teleki' s government resigned, however, 
after the former emperor, Karl IV, unsuccessfully attempted to re- 
take Hungary's throne in March 1921 . King Karl's return marked 
a split between conservatives who favored a Habsburg restora- 
tion and nationalist right-wing radicals who supported election 
of a Hungarian king. Istvan Bethlen, a nonaffiliated, right-wing 
member of the parliament, took advantage of this rift by convinc- 
ing members of the Christian National Union who opposed Karl's 



38 



Historical Setting 



reenthronement to merge with the Smallholders' Party and form 
a new Party of Unity with Bethlen as its leader. Horthy then ap- 
pointed Bethlen prime minister. 

As prime minister, Bethlen dominated Hungarian politics be- 
tween 1921 and 1931 . He fashioned a political machine by amend- 
ing the electoral law, eliminating peasants from the Party of Unity, 
providing jobs in the bureaucracy to his supporters, and manipulat- 
ing elections in rural areas. Bethlen restored order to the country 
by giving the radical counterrevolutionaries payoffs and govern- 
ment jobs in exchange for ceasing their campaign of terror against 
Jews and leftists. In 1921 Bethlen made a deal with the Social 
Democrats and trade unions, agreeing, among other things, to legal- 
ize their activities and free political prisoners in return for their 
pledge to refrain from spreading anti- Hungarian propaganda, call- 
ing political strikes, and organizing the peasantry. In May 1922, 
the Party of Unity captured a large parliamentary majority. Karl 
IV s death, soon after he failed a second time to reclaim the throne 
in October 1921, allowed the revision of the Treaty of Trianon 
to rise to the top of Hungary's political agenda. Bethlen's strategy 
to win the treaty's revision was first to strengthen his country's 
economy and then to build relations with stronger nations that could 
further Hungary's goals. Revision of the treaty had such a broad 
backing in Hungary that Bethlen used it, at least in part, to deflect 
criticism of his economic, social, and political policies. However, 
Bethlen's only foreign policy success was a treaty of friendship with 
Italy in 1927, which had little immediate impact. 

Economic Development 

When Bethlen took office, the government was bankrupt. Tax 
revenues were so paltry that he turned to domestic gold and foreign- 
currency reserves to meet about half of the 1921-22 budget and 
almost 80 percent of the 1922-23 budget. To improve his coun- 
try's economic circumstances, Bethlen undertook development of 
industry. He imposed tariffs on finished goods and earmarked the 
revenues to subsidize new industries. Bethlen squeezed the agricul- 
tural sector to increase cereal exports, which generated foreign cur- 
rency to pay for imports critical to the industrial sector. In 1924, 
after the white terror had waned and Hungary had gained admis- 
sion to the League of Nations (1922), the Bethlen government se- 
cured a US$50 million reconstruction loan from the league, which 
restored the confidence of foreign creditors. Foreign loans and 
domestic capital that had been removed from Hungary during the 
communist revolution flowed back into the country, further fuel- 
ing industrial development. 



39 



Hungary: A Country Study 




Historical Setting 



By the late 1920s, Bethlen's policies had brought order to the 
economy. The number of factories increased by about 66 percent, 
inflation subsided, and the national income climbed 20 percent. 
However, the apparent stability was supported by a rickety frame- 
work of constantly revolving foreign credits and high world grain 
prices; therefore, Hungary remained undeveloped in comparison 
with the wealthier western European countries. 

Despite economic progress, the workers' standard of living re- 
mained poor, and consequently the working class never gave Beth- 
len its political support. The peasants fared worse than the working 
class (see Interwar Period, ch. 2). In the 1920s, about 60 percent 
of the peasants were either landless or were cultivating plots too 
small to provide a decent living. Real wages for agricultural work- 
ers remained below prewar levels, and the peasants had practically 
no political voice. Moreover, once Bethlen had consolidated his 
power, he ignored calls for land reform. The industrial sector failed 
to expand fast enough to provide jobs for all the peasants and univer- 
sity graduates seeking work. Most peasants lingered in the villages, 
and in the 1930s Hungarians in rural areas were extremely dis- 
satisfied. Hungary's foreign debt ballooned as Bethlen expanded 
the bureaucracy to absorb the university graduates who, if left idle, 
might have threatened civil order. 

The Great Depression 

In 1929 the New York Stock Exchange crashed. As a result, world 
grain prices plummeted, and the framework supporting Hungary's 
economy buckled. Hungary's earnings from grain exports declined 
as prices and volume dropped, tax revenues fell, foreign credit 
sources dried up, and short-term loans were called in. Hungary 
sought financial relief from the League of Nations, which insisted 
on a program of rigid fiscal belt-tightening, resulting in increased 
unemployment. The peasants reverted to subsistence farming. In- 
dustrial production rapidly dropped, and businesses went bankrupt 
as domestic and foreign demand evaporated. Government workers 
lost their jobs or suffered severe pay cuts. By 1933 about 18 per- 
cent of Budapest's citizens lived in poverty. Unemployment leaped 
from 5 percent in 1928 to almost 36 percent by 1933. 

As the standard of living dropped, the political mood of the coun- 
try shifted further toward the right. Bethlen resigned without warn- 
ing amid national turmoil in August 1931. His successor, Gyula 
Karolyi, failed to quell the crisis. Horthy then appointed a reac- 
tionary demagogue, Gyula Gombos, but only after Gombos agreed 
to maintain the existing political system, to refrain from calling 
elections before the parliament's term had expired, and to appoint 



41 



Hungary: A Country Study 

several Bethlen supporters to head key ministries. Gombos pub- 
licly renounced the vehement anti-Semitism he had espoused earlier, 
and his party and government included some Jews. 

Radical Right in Power 

Gombos' s appointment marked the beginning of the radical 
right's ascendancy in Hungarian politics, which lasted with few 
interruptions until 1945. The radical right garnered its support from 
medium and small farmers, former refugees from Hungary's lost 
territories, and unemployed civil servants, army officers, and uni- 
versity graduates. Gombos advocated a one-party government, 
revision of the Treaty of Trianon, withdrawal from the League of 
Nations, anti-intellectualism, and social reform. He assembled a 
political machine, but his efforts to fashion a one-party state and 
fulfill his reform platform were frustrated by a parliament com- 
posed mostly of Bethlen's supporters and by Hungary's creditors, 
who forced Gombos to follow conventional policies in dealing with 
the economic and financial crisis. The 1935 elections gave Gombos 
more solid support in the parliament, and he succeeded in gaining 
control of the ministries of finance, industry, and defense and in 
replacing several key military officers with his supporters. In Sep- 
tember 1936, Gombos informed German officials that he would 
establish a Nazi-like, one-party government in Hungary within two 
years, but he died in October without realizing this goal. 

In foreign affairs, Gombos led Hungary toward close relations 
with Italy and Germany; in fact, Gombos coined the term Axis, 
which was later adopted by the German-Italian military alliance. 
Soon after his appointment, Gombos visited Italian dictator Benito 
Mussolini and gained his support for revision of the Treaty of 
Trianon. Later, Gombos became the first foreign head of govern- 
ment to visit German chancellor Adolf Hitier. For a time, Hungary 
profited handsomely, as Gombos signed a trade agreement with 
Germany that drew Hungary's economy out of depression but made 
Hungary dependent on the German economy for both raw materials 
and markets. In 1928 Germany had accounted for 19.5 percent 
of Hungary's imports and 11.7 percent of its exports; by 1939 the 
figures were 52.5 percent and 52.2 percent, respectively. Hungary's 
annual rate of economic growth from 1934 to 1940 averaged 10.8 
percent. The number of workers in industry doubled in the ten 
years after 1933, and the number of agricultural workers dropped 
below 50 percent for the first time in the country's history. Hun- 
gary also used its relationship with Germany to chip away at the 
Treaty of Trianon. In 1938 Hungary openly repudiated the treaty's 
restrictions on its armed forces. With German help, Hungary 



42 



Drumming on Saint Stephen's Day in Borsod County, 
1929 [Sdndor Gbnyey; Ethnographic Museum, Budapest] 

Courtesy Harriet Gerber 

extended its territory four times and doubled in size from 1938 to 
1941. It regained parts of southern Slovakia in 1938, Carpatho- 
Ukraine in 1939, northern Transylvania in 1940, and parts of 
Vojvodina in 1941. 

Hitler's assistance did not come without a price. After 1938 the 
Fiihrer used promises of additional territories, economic pressure, 
and threats of military intervention to pressure the Hungarians into 
supporting his policies, including those related to Europe's Jews, 
which encouraged Hungary's anti-Semites. The percentage of Jews 
in business, finance, and the professions far exceeded the percen- 
tage of Jews in the overall population. The 1930 census showed 
that Jews made up only 5.1 percent of the population but provided 
54.5 percent of its physicians, 31.7 percent of its journalists, and 
49.2 percent of its lawyers. Jews controlled an estimated 19.5 per- 
cent to 33 percent of the national income, four of the five leading 
banks, and 80 percent of Hungary's industry. After the depres- 
sion struck, anti-Semites made the Jews scapegoats for Hungary's 
economic plight. 

Hungary's Jews suffered the first blows of this renewed anti- 
Semitism during the government of Gombos's successor, Kalman 
Daranyi, who fashioned a coalition of conservatives and reactionaries 



43 



Hungary: A Country Study 



and dismantled Gombos's political machine. After Horthy pub- 
licly dashed hopes of land reform, discontented right-wingers took 
to the streets denouncing the government and baiting the Jews. 
Daranyi's government attempted to appease the anti-Semites and 
the Nazis by proposing and passing the first so-called Jewish Law, 
which set quotas limiting Jews to 20 percent of the positions in cer- 
tain businesses and professions. The law failed to satisfy Hungary's 
anti-Semitic radicals, however, and when Daranyi tried to appease 
them again, Horthy unseated him in 1938. The regent then ap- 
pointed the ill-starred Bela Imredy, who drafted a second, harsher 
Jewish Law before political opponents forced his resignation in 
February 1939 by presenting documents showing that Imredy's 
own grandfather was a Jew. 

Imredy's downfall led to Pal Teleki's return to the prime 
minister's office. Teleki dissolved some of the fascist parties but 
did not alter the fundamental policies of his predecessors. He 
undertook a bureaucratic reform and launched cultural and educa- 
tional programs to help the rural poor. Illiteracy dropped to about 
7 percent by 1941. But Teleki also oversaw passage of the second 
Jewish Law, which broadened the definition of ' 'Jewishness," cut 
the quotas on Jews permitted in the professions and in business, 
and required that the quotas be attained by the hiring of Gentiles 
or the firing of Jews. By the June 1939 elections, Hungarian pub- 
lic opinion had shifted so far to the right that voters gave the Arrow 
Cross Party — Hungary's equivalent of Germany's National So- 
cialist German Workers' Party (the Nazi Party) — the second highest 
number of votes. In September 1940, the Hungarian government 
allowed German troops to transit the country on their way to Roma- 
nia, and on November 20, 1940, Hungary signed the Tripartite 
Pact, which allied Germany, Italy, and Japan. 

World War II 

In December 1940, Teleki signed a short-lived Treaty of Eter- 
nal Friendship with Yugoslavia. The Yugoslav government, 
however, was overthrown on March 27, 1941, two days after it 
succumbed to German and Italian pressure and joined the pact. 
Hitler considered the overthrow a hostile act and grounds to in- 
vade. Again promising territory in exchange for cooperation, he 
asked Hungary to join the invasion by contributing troops and 
allowing the Wehrmacht (German armed forces) to march through 
its territory. Unable to prevent the invasion, Teleki committed sui- 
cide on April 3. Three days later, the Luftwaffe mercilessly bombed 
Belgrade without warning, and German troops invaded. Shortly 
thereafter, Horthy dispatched Hungarian military forces to occupy 



44 



Historical Setting 



former Hungarian lands in Yugoslavia, and Hungary eventually 
annexed sections of Vojvodina. 

Horthy named the right-wing radical Laszlo Bardossy to suc- 
ceed Teleki. Bardossy was convinced that Germany would win the 
war and sought to maintain Hungary's independence by appeas- 
ing Hitler. Hitler tricked Horthy into committing Hungary to join 
his invasion of the Soviet Union in June 1941, and Hungary en- 
tered the war against the Western Allies the following December. 
In July 1941, the government deported the first 40,000 Jews from 
Hungary, and six months later Hungarian troops, in reprisal for 
resistance activities, murdered 3,000 Serbian and Jewish hos- 
tages near Novi Sad in Yugoslavia. By the winter of 1941-42, 
German hopes of a quick victory over the Soviet Union had faded. 
In January the German foreign minister visited Budapest asking 
for additional mobilization of Hungarian forces for a planned spring 
offensive and promising in return to hand Hungary some terri- 
tory in Transylvania. Bardossy agreed and committed one-third 
of Hungary's military forces. 

Horthy grew dissatisfied with Bardossy, who resigned in March 
1942, and named Miklos Kallay, a conservative veteran of Beth- 
len's government, who aimed to free Hungary from the Nazis' grip. 
Kallay faced a terrible dilemma: if he broke with Hitler and 
negotiated a separate peace, the Germans would occupy Hungary 
immediately; but if he supported the Germans, he would encourage 
further pro-Nazi excesses. Kallay chose duplicity. In 1942 and 1943, 
pro-Western Hungarian government officials promised British and 
American diplomats that the Hungarians would not fire on their 
aircraft, sparing for a time Hungarian cities from bombardment. 

In January 1943, the Soviet Red Army annihilated Hungary's 
Second Army during the massive counterattack on the Axis troops 
besieging Stalingrad. In the fighting, Soviet troops killed an esti- 
mated 40,000 Hungarians and wounded 70,000. As anti-Axis pres- 
sure in Hungary mounted, Kallay withdrew the remnants of the 
force into Hungary in April 1943, and only a nominal number of 
poorly armed troops remained of the country's military contribu- 
tion to the Axis Powers. Aware of Kallay 's deceit and fearing that 
Hungary might conclude a separate peace, Hitler ordered Nazi 
troops to occupy Hungary and force its government to increase 
its contribution to the war effort. Kallay took asylum in the Tur- 
kish legation. Dome Sztojay, a supporter of the Nazis, became the 
new prime minister. His government jailed political leaders, dis- 
solved the labor unions, and resumed the deportation of Hungary's 
Jews. 



45 



Hungary: A Country Study 



While Kallay was prime minister, the Jews endured economic 
and political repression, but the government protected them from 
the "final solution." The government expropriated Jewish property; 
banned the purchase of real estate by Jews; barred Jews from work- 
ing as publishers, theater directors, and editors of journals; 
proscribed sexual relations between Jews and non-Jews; and out- 
lawed conversion to Judaism. But when the Nazis occupied Hun- 
gary in March 1944, the deportation of the Jews to the death camps 
in Poland began. Horthy used the confusion after the July 20, 1944, 
attempt to assassinate Hitier to replace Sztojay in August 1944 with 
General Geza Lakatos and halt the deportation of Jews from 
Budapest. Of the approximately 725,000 Jews residing within Hun- 
gary's expanded borders of 1941, only about 260,500, mostly from 
Budapest, survived. 

In September, Soviet forces crossed the border, and on October 
15 Horthy announced that Hungary had signed an armistice with 
the Soviet Union. However, the Germans abducted the regent and 
forced him to abrogate the armistice, depose the Lakatos govern- 
ment, and name Ferenc Szalasi — the leader of the Arrow Cross 
Party — prime minister. Horthy abdicated, and soon the country 
became a battlefield. Hungary was sacked first by the retreating 
Germans, who demolished the rail, road, and communications sys- 
tems, then by the advancing Soviet Red Army, which found the 
country in a state of political chaos. Germans held off the Soviet 
troops near Budapest for seven weeks before the defenses collapsed, 
and on April 4, 1945, the last German troops were driven out of 
Hungary. 

Postwar Hungary 

In the aftermath of World War II, a victorious Soviet Union 
succeeded in forcing its political, social, and economic system on 
Eastern Europe, including Hungary. But the Hungarians never 
reconciled themselves to Soviet hegemony over their country and 
rebelled against the Soviet Union and its Hungarian vassals in 1956. 
That revolution was crushed by Soviet tanks, but it brought to 
power Janos Kadar. who then attempted to institute a milder form 
of communist rule. 

Coalition Government and Communist Takeover 

The Hungarian Communist Party (HCP) enjoyed scant popu- 
lar support after the toppling of Bela Kun's short-lived Hungar- 
ian Soviet Republic in 1919 and the subsequent white terror. During 
World War II. a communist cell headed by Laszlo Rajk, a veteran 



46 



Historical Setting 



of the Spanish Civil War (1936-39) and a former communist student 
leader, operated underground within the country. Matyas Rakosi 
led a second, Moscow-based group whose members were later called 
the "Muscovites." After the Soviet Red Army invaded Hungary 
in September 1944, Rajk's organization emerged from hiding, and 
the Muscovites returned to their homeland. Rakosi 's close ties with 
the Soviet occupiers enhanced his influence within the party, and 
a rivalry developed between the Muscovites and Rajk's followers. 
Between the invasion and the end of the war, party membership 
rose significantly. Although party rolls listed only about 3,000 names 
in November 1944, membership had swelled to about 500,000 by 
October 1945. 

Hungary's postwar political order began to take shape even before 
Germany's surrender. In October 1944, Britain's Prime Minister 
Winston Churchill and Foreign Minister Anthony Eden agreed with 
Stalin that after the war the Soviet Union would enjoy a 75 per- 
cent to 80 percent influence in Hungary, Bulgaria, and Romania, 
while the British would have a 20 percent to 25 percent share. On 
December 22, 1944, a provisional government emerged in Debre- 
cen that was made up of the Provisional National Assembly, in 
which communist representatives outnumbered those of the other 
"antifascist" parties, and a cabinet, whose members included a 
general and two other military officers of the old regime, two com- 
munists, two Social Democrats, two members of the Smallholders' 
Party, one member of the National Peasant Party, and one un- 
affiliated member. The provisional government concluded an ar- 
mistice with the Soviet Union on January 20, 1945, while fighting 
still raged in the western part of the country. The armistice estab- 
lished the Allied Control Commission, with Soviet, American, and 
British representatives, which held complete sovereignty over 
the country. The commission's chairman, Marshal Kliment 
Voroshilov, a member of Stalin's inner circle, exercised absolute 
control. 

Stalin decided against an immediate communist seizure of power 
in Hungary; rather, he instructed HCP leaders to take a gradu- 
alist approach and share power with other parties in freely elected 
coalition governments. Stalin informed Rakosi that a communist 
takeover would be delayed ten to fifteen years in order to deflect 
Western criticism of rapid communist takeovers in Poland, Bul- 
garia, Romania, and the Soviet zone of Germany. Stalin desired 
a quick return to normal economic activity to rebuild the Soviet 
Union and sought to avoid a confrontation with the Allies, who 
still had troops in Europe. The members of the HCP who had 
worked underground during the war opposed Stalin's gradualist 



47 



Hungary: A Country Study 

approach and argued for immediate establishment of a dictator- 
ship of the proletariat. 

In April 1945, after Soviet troops had rid Hungary of the Nazis, 
the government moved from Debrecen to Budapest, and a second, 
expanded Provisional National Assembly was chosen. With the sup- 
port of representatives of the trade unions and the Social Democratic 
Party, the HCP enjoyed an absolute majority of the assembly's 
495 seats. The provisional government remained in power until 
November 15, 1945, when voters dealt the HCP an unexpected 
setback in a free election. The Smallholders' Party won 245 seats 
in the National Assembly; the HCP, 70; the Social Democratic 
Party, 69; the National Peasant Party, 21 ; and the Civic Democratic 
Party, 2. The National Assembly proclaimed the Hungarian 
Republic on February 1, 1946, and two Smallholder-led coalitions 
under Zoltan Tildy and Ferenc Nagy governed the country until 
May 1947. 

The HCP soon formed a leftist alliance with the Social Democra- 
tic Party and the National Peasant Party and gained control of sev- 
eral key offices, including the leadership of the security police and 
the army general staff. Voroshilov vetoed an agreement reached 
by the coalition members to name a member of the Smallholders' 
Party to head the Ministry of Interior. A National Peasant Party 
member loyal to the HCP won the post and made the police a 
powerful tool of the communists. The National Assembly under- 
mined freedoms guaranteed in Hungary's constitution when it 
banned statements that could be interpreted as hostile to the 
democratic order or the country's international esteem. Later, as 
Hungary's democratic order became identified with HCP policies, 
the law was used to silence legitimate opponents. 

In the immediate postwar period, the government pursued eco- 
nomic reconstruction and land reform (see Postwar Societal Trans- 
formation, ch. 2). Hungary had been devastated in the last years 
of World War II. About 24 percent of its industrial base was de- 
stroyed. Many of the large landowners and industrialists fled Hun- 
gary in advance of the Soviet Red Army. Reconstruction proceeded 
rapidly, expedited by gradual nationalization of mines, electric 
plants, the four largest concerns in heavy industry, and the ten 
largest banks. In 1945 the government also carried out a radical 
land reform, expropriating all holdings larger than fifty-seven hec- 
tares and distributing them to the country's poorest peasants. 
Nevertheless, the peasants received portions barely large enough 
for self-sufficiency. Finally, the government introduced a new 
currency — the forint — to help curb high inflation. 



48 



Historical Setting 



Using methods Rakosi later called "salami tactics," the HCP 
strengthened its position in the coalition by discrediting leaders of 
rival parties as "reactionaries" or "antidemocratic," forcing their 
resignation from the government and sometimes prompting their 
arrest. In 1945 ex-members of Horthy's regime lost their positions. 
A year later, members of the Smallholders' Party and the Social 
Democratic Party were ousted from power. In late 1946, leaders 
of the Smallholders' Party were arrested. In 1947 the Soviet Union 
ordered the arrest of Bela Kovacs, the secretary general of the Small- 
holders' Party, on the false charge of plotting to overthrow the 
government. The Smallholders' Party was dissolved after Ferenc 
Nagy resigned his position as prime minister. The leftist bloc gained 
a small lead over its rivals in the 1947 general elections. The HCP 
tallied only 22 percent of the vote, but fraud tainted the election, 
and suspicions arose that the party actually enjoyed less support. 

The Treaty of Paris, signed on February 10, 1947, required Hun- 
gary to pay US$200 million in reparations to the Soviet Union, 
US$50 million to Czechoslovakia, and US$50 million to Yugoslavia. 
Hungary also had to transfer a piece of territory to Czechoslovakia, 
leaving Hungary with slightly less territory than it had had after 
the Treaty of Trianon. Stalin had already returned Transylvania 
to the Romanians to reinforce the position of the procommunist 
Prime Minister Petru Groza. Thereafter, the Romanians' treat- 
ment of the Hungarian minority in Transylvania became an irri- 
tant in relations between the two countries (see Relations with Other 
Communist Neighbors, ch. 4). 

Rdkosi's Rule 

In 1947 the postwar cooperation between the Soviet Union and 
the West collapsed, marking the beginning of the Cold War and 
the beginning of the end for Hungary's democratic coalition govern- 
ment. Having seen communist parties seize power in Poland, 
Romania, Bulgaria, and Yugoslavia and a communist insurgency 
threaten Greece, the Western powers dedicated themselves to con- 
taining Soviet influence. In May communists were expelled from 
the governments of Italy and France, and a month later the United 
States promulgated the Marshall Plan for the economic reconstruc- 
tion of Europe, which was appealing to the East European gov- 
ernments. 

Stalin feared a weakening of the Soviet Union's grip on Eastern 
Europe. Anticommunist forces in the region remained potent, and 
most of the communist governments were unpopular. In addition, 
East European parties began taking positions independent of 
Moscow; for example, communists in the Polish and Czechoslovak 



49 



Hungary: A Country Study 



governments favored participation in the Marshall Plan, and 
Yugoslavia and Bulgaria broached the idea of a Balkan confedera- 
tion. By September Stalin had abandoned gradualism and reversed 
his earlier advocacy of independent, "national roads to socialism." 
He now pushed for tighter adherence to Moscow's line and rapid 
establishment of Soviet-dominated communist states in Hungary 
and elsewhere. The policy shift was indicated in September 1947 
at the founding meeting of the Cominform, an organization link- 
ing the Soviet communist party with the communist parties of 
Eastern Europe, France, and Italy. 

The HCP proceeded swifdy to assume full control of the govern- 
ment. First Secretary Rakosi became the country's most powerful 
official and dictated major political and economic changes. In 
October 1947, noncommunist political figures were told to cooperate 
with a new coalition government or leave the country. In June 1948, 
the Social Democratic Party merged with the HCP, forming the 
Hungarian Workers' Party (HWP). In 1949 the regime held a 
single-list election, and on August 20 of that year the government 
ratified a Soviet-style constitution (see Constitution of 1949, ch. 4). 
The official name of the country became the Hungarian People's 
Republic, and the HWP's control of the government was assured. 
In 1952 Rakosi also became prime minister. 

In 1948 Yugoslavia was expelled from the Cominform, and the 
Soviet- Yugoslav rift broke into the open. Almost overnight it be- 
came treasonous for communists to display any approval of Yugo- 
slav leader Josip Broz Tito or to advocate national roads to 
socialism. Beginning in 1949, the Soviet Union unleashed a four- 
year reign of terror against "Titoists" in Eastern Europe. Rakosi 
purged members of the party's wartime underground, potential 
rivals, and hundreds of others. Rajk, who continued to support 
a Hungarian road to socialism, "confessed" to being a Titoist and 
a fascist spy and was hanged in 1950. Another victim was future 
party chief Janos Kadar, who was jailed and tortured for three years. 

Between 1948 and 1953, the Hungarian economy was reor- 
ganized according to the Soviet model (see Economic Policy and 
Performance, 1945-85, ch. 3). In a campaign reminiscent of the 
Soviet Union's forced collectivization of agriculture in the 1930s, 
the regime compelled most peasants to join collective farms and 
required them to make deliveries to the government at prices lower 
than the cost of production. The regime accelerated nationaliza- 
tion of banking, trade, and industry, and by December 1949 nearly 
99 percent of the country's workers had become state employees. 
The trade unions lost their independence, and the government in- 
troduced Soviet-style central planning. Planners neglected the 



50 



Historical Setting 



production of consumer goods to focus on investment in heavy in- 
dustry, especially steel production, and economic self-sufficiency. 
In January 1949, Hungary joined the Council for Mutual Eco- 
nomic Assistance (Comecon — see Glossary), an organization 
designed to further economic cooperation among the Soviet Union's 
satellites. The authorities also agreed to form joint-stock compa- 
nies with the Soviet Union. These companies allowed the Soviet 
Union to dominate Hungary's air and river transportation, as well 
as its bauxite, crude oil, and refining industries and other sectors. 

With the opposition parties disbanded and the trade unions col- 
lared, the churches became the communists' main source of oppo- 
sition. The government had expropriated the churches' property 
with the land reform, and in July 1948 it nationalized church 
schools. Protestant church leaders reached a compromise with the 
government, but the head of the Roman Catholic Church — Car- 
dinal Jozsef Mindszenty — resisted. The government arrested him 
in December 1948 and sentenced him to life imprisonment. Shortly 
thereafter, the regime disbanded most Catholic religious orders, 
and it secularized Catholic schools (see Religion and Religious 
Organizations, ch. 2). 

Stalin died in March 1953. The new Soviet leadership soon per- 
mitted a more flexible policy in Eastern Europe known as the New 
Course. In June, Rakosi and other party leaders — among them 
Imre Nagy — were summoned to Moscow, where Soviet leaders 
harshly criticized them for Hungary's dismal economic perfor- 
mance. Soviet communist party Presidium member Lavrenti Beria 
reportedly upbraided Rakosi for naming Jews to Hungary's top 
party positions and accused him of seeking to make himself the 
"Jewish King of Hungary." (Communists of Jewish origin had 
dominated the party leadership and the secret police for a decade 
after the war, and every party leader from Bela Kun to Erno Gero 
had Jewish roots.) Rakosi retained his position as party chief, but 
the Soviet leaders forced the appointment of Nagy as prime 
minister. He quickly won the support of the government minis- 
tries and the intelligentsia. Nagy also ended the purges and began 
freeing political prisoners. In his first address to the National As- 
sembly as prime minister, Nagy attacked Rakosi for his use of ter- 
ror, and the speech was printed in the party newspaper. 

Nagy charted his New Course for Hungary's drifting economy 
in a speech before the Central Committee, which gave the plan 
unanimous approval (see Party Structure, ch. 4). Hungary ceased 
collectivization of agriculture, allowed peasants to leave the col- 
lective farms, canceled the collective farms' compulsory production 



51 



Hungary: A Country Study 

quotas, and raised government prices for deliveries. Government 
financial support and guarantees were extended to private 
producers, investment in the farm sector jumped 20 percent in the 
1953-54 period, and peasants were able to increase the size of their 
private plots. The number of peasants on collective farms thus 
shrank by half between October and December 1953. Nagy also 
slashed investment in heavy industry by 41.1 percent in 1953-54 
and shifted resources to light industry and the production of con- 
sumer goods. However, Nagy failed to fundamentally alter the plan- 
ning system and neglected to introduce incentives to replace 
compulsory plan targets, resulting in a poorer record of plan ful- 
fillment after 1953 than before. Rakosi used his influence to dis- 
rupt Nagy's reforms and erode his political position. In 1954 Soviet 
leaders who favored economic policies akin to Nagy's lost a Kremlin 
power struggle. Rakosi seized the opportunity to attack Nagy as 
a right-wing deviationist and to criticize shortcomings in the econ- 
omy. Nagy was forced to resign from the government in April 1955 
and was later expelled from the Politburo, Central Committee, and 
finally the party itself. Thus, the Central Committee that had lauded 
the New Course in June 1953 unanimously condemned its architect 
less than two years later. 

After Nagy's fall, collectivization and development of heavy in- 
dustry again became the prime focus of Hungary's economy. The 
purges did not resume, however, as Rakosi did not enjoy the same 
amount of power or Soviet support that he did while Stalin was 
alive. Moreover, he now had to contend with many outspoken op- 
ponents within the party, including numerous victims of the purges 
who had been readmitted to the HWP on Moscow's orders. A 
schism soon split the party leadership from the rank and file, and 
the party organization within the Writers' Association became a 
forum for intraparty opposition. In 1955 a rapprochement between 
the Soviet Union and Yugoslavia produced the Belgrade Declara- 
tion, in which Moscow confirmed that each nation had the right 
to follow its own road to socialism. One year later, Soviet leader 
Nikita S. Khrushchev denounced Stalin in his "secret speech" be- 
fore the Twentieth Party Congress of the Soviet communist party. 
These external events shook Rakosi, who was a strong opponent 
of Titoism and the instigator of Hungary's purges. 

HWP members opposed to Rakosi compelled him to admit that 
the purges involved abuse of power and that Rajk and others had 
been its innocent victims. Rakosi ordered an investigation, but it 
cleared him and blamed the state security police instead. This result 
not only inflamed the party opposition but also alienated Rakosi 
from the police. In June 1956, Rakosi 's position became untenable. 



52 



Historical Setting 



The party press printed open attacks. The Writers' Association, 
the newly created Petofi Circle (see Glossary), and student organi- 
zations clamored for Rakosi's ouster and arrest. On June 30, the 
Central Committee dissolved the Petofi Circle and expelled intellec- 
tuals from the party. By mid-July, however, Soviet leaders began 
to fear outright revolution and called for Rakosi to step down. He 
resigned after a meeting of the Central Committee on July 17. Gero, 
Rakosi's deputy, was appointed first secretary. Moscow hoped to 
introduce a slow liberalization, but Gero was too closely identified 
with Rakosi, and party discipline subsequently broke down com- 
pletely. 

Revolution of 1956 

On October 23, a Budapest student rally in support of Polish 
efforts to win autonomy from the Soviet Union sparked mass 
demonstrations. The police attacked, and the demonstrators fought 
back, tearing down symbols of Soviet domination and HWP rule, 
sacking the party newspaper's offices and shouting in favor of free 
elections, national independence, and the return of Imre Nagy to 
power. Gero called out the army, but many soldiers handed their 
weapons to the demonstrators and joined the uprising (see Histor- 
ical Background and Traditions, ch. 5). Soviet officials in Budapest 
summoned Nagy to speak to the crowd, but the violence continued. 
At Gero's request, Soviet troops entered Budapest on October 24. 
The presence of these troops further enraged the Hungarians, who 
battled the troops and state security police. Crowds emptied the 
prisons, freed Cardinal Mindszenty, sacked police stations, and 
summarily hanged some members of the secret police. The Cen- 
tral Committee named Nagy prime minister on October 25 and 
selected a new Politburo and Secretariat; one day later, Janos Kadar 
replaced Gero as party first secretary. 

Nagy enjoyed vast support. He formed a new government con- 
sisting of both communists and noncommunists, dissolved the state 
security police, abolished the one-party system, and promised free 
elections and an end to collectivization, all with Kadar' s support. 
But Nagy failed to harness the popular revolt. Workers' councils 
threatened a general strike to back demands for removal of Soviet 
troops, elimination of party interference in economic affairs, and 
renegotiation of economic treaties with the Soviet Union. On Oc- 
tober 30, Nagy called for the formation of a new democratic, multi- 
party system. Noncommunist parties that had been suppressed 
almost a decade before began to reorganize. A coalition govern- 
ment emerged that included members of the Smallholders' Party, 
Social Democratic Party, National Peasant Party, and other parties, 



53 



Hungary: A Country Study 

as well as the HWP. After negotiations, Soviet officials agreed to 
remove their troops at the discretion of the Hungarian government, 
and Soviet troops began to leave Budapest. Nagy soon learned, 
however, that new Soviet armored divisions had crossed into 
Hungary. 

In response, on November 1 Nagy announced Hungary's deci- 
sion to withdraw from the Warsaw Pact (see Glossary) and to declare 
Hungary neutral. He then appealed to the United Nations and 
Western governments for protection of Hungary's neutrality. The 
Western powers, which were involved in the Suez crisis and were 
without contingency plans to deal with a revolution in Eastern 
Europe, did not respond. 

The Soviet military reacted to Hungarian events with a quick 
strike. On November 3, Soviet troops surrounded Budapest and 
closed the country's borders. Overnight they entered the capital 
and occupied the National Assembly building. Kadar, who had 
fled to the Soviet Union on November 2 , assembled a Temporary 
Revolutionary Government of Hungary on Soviet soil just across 
the Hungarian border. On November 4, the formation of the new 
government was announced in a radio broadcast. Kadar returned 
to Budapest in a Soviet armored car; by then, Nagy had fled to 
the Yugoslav embassy, Cardinal Mindszenty had taken refuge in 
the United States embassy, Rakosi was safely across the Soviet 
border, and about 200,000 Hungarians had escaped to the West. 

With Soviet support, Kadar struck almost immediately against 
participants in the revolution. Over the next five years, about 2,000 
individuals were executed and about 25,000 imprisoned. Kadar 
also reneged on a guarantee of safe conduct granted to Nagy, who 
was arrested on November 23 and deported to Romania. In June 
1958, the Hungarian government announced that Nagy and other 
government officials who had played key roles in the revolution 
had been secretly tried and executed. 

Kadar's Reforms 

The Revolution of 1956 discredited Hungary's Stalinist politi- 
cal and economic system and sent a clear warning to the leader- 
ship that popular tolerance for its policies had limits, and that if 
these limits were exceeded, popular reaction could threaten com- 
munist control. In response, regime leaders decided to formulate 
economic policies leading to an improvement of the population's 
standard of living. Pragmatism and reform gradually became the 
watchwords in economic policy-making, especially after 1960, and 
policymakers began relying on economists and other specialists 
rather than ideologists in the formation of economic policies. The 



54 



Historical Setting 



result was a series of reforms that modified Hungary 's rigid, cen- 
trally planned economy and eventually introduced elements of a 
free market, creating a concoction sometimes called "goulash com- 
munism" (see Economic Policy and Performance, 1945-85, ch. 3). 

In late 1956, the party named a committee of mostly reform- 
minded experts to examine Hungary's economic system and make 
proposals for its revision. The committee's report marked the first 
step on Hungary's road to economic reform. Its proposals presaged 
many of the changes implemented a decade later, including elimi- 
nation of administrative direction of the economy, introduction of 
greater enterprise autonomy, cooperation between private and col- 
lective sectors in agriculture, economic regulation using price and 
credit policies, and central planning focused only on long-term ob- 
jectives. However, the committee's proposals were never really im- 
plemented. Some observers suggested that the party had solidified 
its power so quickly that it no longer needed to enact such drastic 
measures; others claimed that Soviet leaders opposed such reform 
until they ensured that the party (on November 1, 1956, renamed 
the Hungarian Socialist Workers' Party — HSWP) had consolidated 
its power and demonstrated a clear need for a fundamental eco- 
nomic change. During the chaos of the revolution, Hungary's col- 
lective farms lost about two-thirds of their members. Many left to 
become private farmers. In July 1957, Kadar appeased hard-liners 
in Hungary and abroad by agreeing to recollectivize agriculture, 
and in early 1959 the drive began in earnest. The regime com- 
bined force and economic coercion with persuasion and incentives 
to drive peasants back to the collective farms (see Agricultural 
Organization, ch. 3). The government abolished compulsory 
production quotas and delivery obligations and substituted volun- 
tary contracts at good prices. It also permitted profit-sharing 
schemes and programs to promote technical innovation. The re- 
gime allowed peasants to retain sizable private plots and ample 
livestock and to choose between collective or cooperative farms. 
The farms also received substantial government investments. As 
a result, Hungary became the only country with a centrally planned 
economy where crop output increased as a result of collectiviza- 
tion. By 1962 more than 95 percent of all farmland had been col- 
lectivized either in the form of state farms or cooperatives. The 
collectivization drive deflected the hard-liners' criticism of Kadar 
for his advocacy of reform, and problems with the program's im- 
plementation, including excessive coercion of the peasants, later 
helped Kadar oust the hard-line agriculture minister. 

By the early 1960s, Hungary was ripe for a political shake-up. 
Khrushchev had consolidated his position in the Kremlin and had 



55 



Hungary: A Country Study 



begun a second wave of de-Stalinization, thus leading Kadar to 
believe that the Soviet leadership would support political changes 
in Hungary. Kadar replaced Ferenc Munnich as prime minister 
(who had served in that position since January 28, 1958), and as- 
sumed the top government post, together with the leadership of 
the HSWP. He then dismissed other hard-line officials. Kadar' s 
consolidation of power led to a more flexible, pragmatic atmosphere 
in which persuasion took on greater importance than coercion. 
Kadar relaxed government oppression and released most of those 
imprisoned for participating in the revolution. Soon Hungary be- 
came the leader of the reform movement within the Soviet alliance 
system. Kadar intended to provide the regime with some legitimacy 
and political stability based on solid economic performance. The 
Soviet Union demonstrated its support with its decision to with- 
draw its advisers to the Hungarian government. 

Kadar next sought a modus vivendi with the population, sum- 
marizing the new policy with the slogan "He who is not against 
us is with us." As part of this "alliance policy," in 1961 he de- 
nounced the practice of making party membership a prerequisite 
for jobs demanding specialization and technical expertise. Kadar 
sought to remove opportunists who had joined the party solely for 
the status and economic benefits that membership conferred. 
Rather, Kadar wanted to open the government and economic enter- 
prises to talented people who were prepared to cooperate without 
adhering to party discipline or compromising their political beliefs. 

At the Eighth Party Congress of the HSWP in November 1962, 
Kadar supporters replaced Stalinists and incompetent officials in 
leading party positions. The congress also called for higher party 
recruitment standards, for elimination of political and class con- 
siderations in university admissions, and for allowing nonparty 
members to compete for leading public positions. Although the party 
still had influential conservative members after 1962, the Eighth 
Party Congress removed them from the party's policy-making core. 
As a result of these changes, by 1963 Kadar had acquired genuine 
popular support. 

Plans for reforming the centrally planned economy steadily took 
shape after the Eighth Party Congress. Central Committee secre- 
tary Rezso Nyers, who supported a comprehensive reform rather 
than continued piecemeal adjustments to the economic system, took 
charge of economic affairs. The regime also appointed commit- 
tees to prepare reform proposals. By 1964 the government had iden- 
tified problems in the economy, including excessive investment, 
decreases in output and labor shortages in agriculture, misuse of 
inputs, hoarding of materials, and production of unsalable goods. 



56 



Historical Setting 



Since the Treaty of Trianon, Hungary had depended on foreign 
trade, and in the early 1960s the government placed top priority 
on improving trade with the West and the Comecon countries. 
Despite improving the terms of trade, however, by 1964 Hungary 
had accumulated a serious trade deficit, and the government could 
not slow imports without cutting material supplies and personal 
consumption. Officials realized that because Hungary had to boost 
exports, it would have to meet the needs, quality standards, and 
technological requirements of the world economy. 

New Economic Mechanism 

Khrushchev's ouster in October 1964 failed to weaken Hungary's 
desire for reform. Kadar responded to the change in the Kremlin 
by affirming that "the political attitude of the HSWP and the 
government of the Hungarian People's Republic has not changed 
one iota, nor will it change." In December 1964, a Central Com- 
mittee plenum approved the basic concept of economic reform and 
formed a committee to provide fundamental guidelines. 

Economic problems also continued to underscore the need for 
reform. Agricultural output fell by 5.5 percent. In addition, the 
government increased production quotas, cut wages, and an- 
nounced price hikes. Popular discontent rose as a result. 

In May 1966, the Central Committee approved a sweeping re- 
form package known as the New Economic Mechanism (NEM). 
Although many of its elements could be phased in during a prepa- 
ration period, the central features of the reform could be imple- 
mented only with the introduction of a new price system, which 
was set for January 1, 1968. With the NEM, the government sought 
to overcome the inefficiencies of central planning, to motivate 
talented and skilled people to work harder and produce more, to 
make Hungary's products competitive in foreign markets, espe- 
cially in the West, and, above all, to create the prosperity that would 
ensure political stability. 

The NEM decentralized decision making and made profit, rather 
than plan fulfillment, the enterprises' main goal. Instead of set- 
ting plan targets and allocating supplies, the government was to 
influence enterprise activity only through indirect financial, fiscal, 
and price instruments known as "economic regulators." The NEM 
introduced a profit tax and allowed enterprises to make their own 
decisions concerning output, marketing, and sales. Subsidies were 
eliminated for most goods except basic raw materials. The govern- 
ment decentralized allocation of capital and supply and partially 
decentralized foreign trade and investment decision making. The 
economy's focus moved away from heavy industry to light industry 



57 



Hungary: A Country Study 

and modernization of the infrastructure. Finally, agricultural col- 
lectives gained the freedom to make investment decisions. The 
NEM's initial results were positive. In the 1968-70 period, plan 
fulfillment was more successful than in previous years. The stan- 
dard of living rose as production and trade increased. Product vari- 
ety broadened, sales increased faster than production, inventory 
backlogs declined, and the trade balance with both East and West 
improved. In practice, however, the reform was not as sweeping 
as planned. Enterprises continued to bargain with government 
authorities for resources from central funds and sought preferen- 
tial treatment. The reform also failed to dismantle the highly con- 
centrated industrial structure, which was originally established to 
facilitate central planning and which inhibited competition under 
the NEM. 

The Kadar regime failed to understand that real economic de- 
centralization required political reform to resolve conflicts that 
naturally arose between different interest groups. The government's 
problem was to expand "socialist democracy," that is, to build 
a system that would simultaneously resolve conflicts and maintain 
the HSWP's political monopoly. In fact, the government attempted 
some incremental changes. The courts gained greater independence 
in administering justice, and changes were introduced in parlia- 
ment as deputies on committees of the National Assembly were 
instructed to examine and debate legislation more effectively. A 
1966 electoral law created single-representative constituencies and 
contained a provision for elections with multiple candidates. 
However, the Patriotic People's Front (PPF) retained control of 
nominations (see Patriotic People's Front, ch. 4). Even after a sec- 
ond electoral law in 1970 made it legal for other groups to nominate 
individuals, few multiple candidacies actually arose (see Elections 
to the National Assembly, ch. 4). These minimal changes quickly 
encountered resistance from entrenched party officials. The 1968 
Soviet invasion of Czechoslovakia and suppression of the reform 
program there had also discouraged the HS WP from pursuing fur- 
ther political changes. However, Kadar was able to work out a 
modus vivendi with the Soviet leadership. The Soviet Union al- 
lowed Kadar leeway to implement economic reforms, develop some 
economic contacts with the West, and permit Hungarians to travel 
abroad as long as Budapest accepted Moscow's hegemony in 
Eastern Europe and adhered to Soviet foreign policy positions. 

The Kadar regime gave serious attention to implementing the 
NEM from 1968 to 1972. In 1971, however, counterreform forces 
were gathering strength and calling for the return of central con- 
trols. The opposition arose from government and party bureaucrats 



58 



Historical Setting 



and was supported by large enterprises and some workers. The 
bureaucrats perceived the NEM as a threat to their privileged po- 
sitions. The large enterprises saw their income drop after the in- 
troduction of the NEM and were troubled by competition for 
materials and labor from smaller enterprises. Disaffected workers 
who were on the payrolls of outdated, inefficient industries resented 
the higher incomes earned by workers in more modern firms. This 
opposition successfully reversed the reform a few months after 
Moscow expressed reservations about the NEM and concern about 
"petit bourgeois tendencies" in Hungary. 

In November 1972, the Central Committee introduced a pack- 
age of extraordinary measures to recentralize part of the economy, 
but the regime did not formally abandon the NEM . Fifty large en- 
terprises, which produced about 50 percent of Hungary's indus- 
trial output and 60 percent of its exports, came under direct 
ministerial supervision, supported by special subsidies. New re- 
strictions applied to small enterprises and agricultural producers. 
Wages rose, prices came under central control, and the regime in- 
troduced price supports. In the following years, the government 
also merged many profitable small firms with large enterprises. 

The 1973 world oil crisis and the subsequent recession in the 
West caused a drastic deterioration of Hungary's terms of trade 
and strengthened opposition to the reform. Inflation threatened, 
and counterreformers argued for protecting the living standard of 
the working class from an economic shock in the capitalist world. 
The government intervened by raising taxes on successful firms 
and increasing government purchases and subsidies. Consumer 
prices eventually fell below the level of producer prices, and Hun- 
gary accepted credits from Western banks. Centralized material 
allocation was reintroduced. After the oil crisis arose, ideological 
opposition to the NEM and to "bourgeois attitudes" emerged as 
well. A clampdown on intellectuals began, and Nyers lost his Polit- 
buro position in 1974. 

By 1978 Hungary's dismal economic performance made it clear 
even to the counterreformers in the leadership that a "reform of 
the reform" was necessary. Return to central control had only re- 
warded inefficiency and stifled innovation and initiative. Enter- 
prises ignored market signals, and shortages plagued producers. 
Large amounts of money were invested in poorly conceived projects, 
and a trade deficit accumulated. Hungary's hard-currency debt 
reached US$7.5 billion by 1978 and had jumped to US$9.1 bil- 
lion by 1980. 

In 1978 the government admitted that its attempt to shield Hun- 
gary from world economic conditions could not be continued. 



59 



Hungary: A Country Study 

Hoping to improve its trade balance with the West and avoid forced 
rescheduling of its debt, the government announced its intention 
to boost exports. This policy change marked the beginning of a 
new wave of reforms. First, the price system was restructured to 
bring consumer prices gradually in line with world market prices 
and to ease the burden of subsidies on the state budget. Next, 
producer prices were reformed to bring about more rational use 
of energy and raw materials. Finally, the government overhauled 
exchange-rate and foreign-trade regulations. 

In 1979 and 1980, the government implemented a number of 
institutional reforms. The new reforms abolished branch minis- 
tries and replaced them with a single Ministry of Industry intended 
to act as a policy-formulating body without direct authority over 
enterprises. Large enterprises were broken up into smaller firms. 
In 1982 the government legalized the formation of small private 
firms, including restaurants, small shops, and service companies, 
and it permitted workers to lease enterprise equipment, use it on 
their own time, and keep the earnings from their products. In 1984 
the regime introduced new forms of enterprise management, in- 
cluding supervisory councils that would include worker-elected 
representatives. New financial institutions also emerged, and a 1983 
government decree allowed enterprises, cooperatives, financial in- 
stitutions, and local governments to issue bonds. 

In the early and mid-1980s, Kadar had encouraged a limited 
amount of political liberalization. The HSWP maintained its mo- 
nopoly on political power, but the norms of democratic centralism 
were looser than in other countries of Eastern Europe (see 
Democratic Centralism, ch. 4). County party secretaries acquired 
the freedom to make decisions of local importance, including con- 
trol of personnel. The government again exhorted delegates of the 
National Assembly to scrutinize laws and government policies more 
critically. In 1983 a new electoral law required a minimum of two 
candidates for each national and local constituency in general elec- 
tions. Trade unions began to defend workers' interests more ener- 
getically. Journalists were urged to expose low- and mid-level 
corruption and abuse of power, although they could not criticize 
the regime's basic tenets. The leadership also bolstered economic 
reforms of the early 1980s with a foreign policy geared to a greater 
degree than before on trade with the West, and it maintained 
this course during the deterioration of superpower relations in the 
early 1980s. Thus, the economic reforms of the late 1960s had also 
come to provoke a measure of political reform and changes in for- 
eign policy. These new departures were inspired in large measure 
by Hungarian nationalism, a force that had long encouraged 



60 



Historical Setting 



Hungarians to control their own destiny and to resist the hegemony 
of their larger, more powerful neighbors. 

* * * 

Two brief histories of Hungary are Denis Sinor's History of Hun- 
gary and C.A. Macartney's Hungary: A Short History. Robert A. Kann 
discusses Hungary against the backdrop of the Austrian empire 
in A History of the Habsburg Empire, 1526-1918. Erik Fiigedi's Castle 
and Society in Medieval Hungary (1000-1437) provides an intriguing 
analysis of the impact of casde-building on Hungary's development. 
For further reading on Hungary in the nineteenth century, George 
Barany's Stephen Szechenyi and the Awakening of Hungarian National- 
ism, 1791-1841 is an excellent account of the reform leader's early 
years; Andrew C. Janos's The Politics of Backwardness in Hungary, 
1825-1945 offers a detailed analysis of Hungary's economic, so- 
cial, and political history; and John Paget 's Hungary and Transylva- 
nia is an interesting travelogue. Paul Kecskemeti's The Unexpected 
Revolution provides a compelling analysis of the Revolution of 1956, 
and Charles Gati's Hungary and the Soviet Bloc describes the com- 
munist takeover of Hungary and Hungary's relations with the 
Soviet Union. Detailed information on the origins and develop- 
ment of Hungary's economic reform programs is found in Judy 
Batt's Economic Reform and Political Change in Eastern Europe and Paul 
Marer's " Economic Reform in Hungary." (For further informa- 
tion and complete citations, see Bibliography.) 



61 



Chapter 2. The Society and Its Environment 



A peasant girl, Esztergom, 1918 



THE PEOPLE'S REPUBLIC OF HUNGARY lies in the cen- 
tral Danube Basin. With 92,103 square kilometers of territory, it 
is the sixteenth largest European country. The country's terrain 
consists largely of plains and hill country and is divided into three 
major geographic areas: the Great Plain, covering the central part 
of the country, the Transdanube in the west, and the Northern 
Hills along the northern border. The climate is mild and continen- 
tal, although great contrasts in temperatures can occur. 

In 1988 the country had about 10.6 million inhabitants. Popu- 
lation had grown slowly since the late 1970s and had begun to 
decline in 1981. In 1986 about 19.2 percent of the population lived 
in Budapest, the country's cultural, political, and economic center. 
Beginning in 1978, for the first time in the country's history, more 
people lived in urban centers than in rural areas. By 1988 about 
62 percent of the populace lived in urban centers with populations 
exceeding 10,000. 

In the late 1980s, more than 96 percent of the people were eth- 
nic Magyars. The minority, or non-Magyar, population was small 
and included Germans, Slovaks, Serbs, Croats, Slovenes, Roma- 
nians, Jews, Gypsies, and Greeks. Most non-Magyars were bilin- 
gual, speaking both their own language and Hungarian. 

The combined impact of World War II and the communist 
takeover in 1947 brought about great changes in the social struc- 
ture. For more than a decade, the new communist government 
sought to create a classless society through various forms of social 
engineering. Beginning in the 1960s, these efforts gave way to more 
indirect methods of social and economic control. The pace of change 
slowed, and a social structure took shape that once again contained 
clearly stratified groups. In its new form, society did not display 
the extremes of wealth and poverty characteristic of the interwar 
period. However, as the country's economic difficulties increased 
in the 1980s, tensions appeared to build between the wealthy elites 
and the sizable disadvantaged groups in society. Public discussion 
acknowledged these growing tensions and debated methods for over- 
coming them. 

The family remained the basic social unit. The state recognized 
marriage as a secular institution and held the stability of families 
to be a desirable social goal. However, observers in the 1980s iden- 
tified a number of sources of family stress that appeared to con- 
tribute to a high rate of divorce. 



65 



Hungary: A Country Study 

After the communist assumption of power in the late 1940s, sev- 
eral mass organizations — official trade unions, the National Council 
of Hungarian Women, and the Communist Youth League — were 
established to interpret for various segments of the population the 
social and political goals of the Hungarian Socialist Workers' Party, 
to mobilize support for it, and to serve as centers of a collective 
social life. But in the late 1980s, these organizations were losing 
members, and they faced growing competition from new unoffi- 
cial groups that emerged in the relaxed political atmosphere. 

According to Western estimates, in the late 1980s about 67.5 
percent of the population was Roman Catholic, 20 percent was 
Reformed (Calvinist), 5 percent was Lutheran, and 5 percent was 
unaffiliated. The country also contained smaller groups of Uniates 
(Catholics of the Eastern Rite), Greek Orthodox, various small 
Protestant sects, and Jews. In 1989 the government abolished 
the State Office for Church Affairs, which had supervised the 
churches. A proposal for new law submitted for public discussion 
in 1989 was intended to eliminate almost all restrictions on the 
churches. 

The country's education system provided free, compulsory 
schooling for young people from six to sixteen years of age. About 
half of all students attended general schools (also known as ele- 
mentary schools) for eight years and then completed their educa- 
tion through vocational training. The remainder continued their 
studies in a four-year gymnasium (a secondary school for univer- 
sity preparation) or trade school. The general schools' curriculum 
stressed technical and vocational training. In the 1980s, almost 10 
percent of the population aged eighteen to twenty-two was en- 
rolled in regular daytime courses of study at institutions of higher 
learning. 

In the late 1980s, the state health care and pension systems were 
highly centralized. Medical care was free to all citizens. However, 
many physicians maintained private practices, and people who 
could afford to receive care on a private basis often preferred to 
do so. Availability of medical personnel and hospital beds was high 
by international standards. The country's pension system, although 
extensive, was the object of considerable criticism in the 1980s be- 
cause of the low levels of support provided to many retirees. 

In the late 1980s, the bounds of permissible expression in Hun- 
gary suddenly had become wide by East European standards. 
Authorities had lifted most traditional prohibitions. Opposition 
groups were able to function legally. Consequently, the country 
experienced a quickening and enlivening of cultural and intellec- 
tual life. 



66 



The Society and Its Environment 

Physical Environment 

With a land area of 92, 103 square kilometers, Hungary is roughly 
the size of the state of Indiana. It measures about 250 kilometers 
from north to south and 524 kilometers from east to west. It has 
some 2,258 kilometers of boundaries, shared with Austria to the 
west, Yugoslavia to the south and southwest, Romania to the 
southeast, the Soviet Union to the northeast, and Czechoslovakia 
to the north. 

Hungary's modern borders were first established after World 
War I when, by the terms of the Treaty of Trianon in 1920, it 
lost more than two-thirds of what had formerly been the Kingdom 
of Hungary and 58.5 percent of its population (see Trianon Hun- 
gary, ch. 1). With the aid of Nazi Germany, the country secured 
some boundary revisions at the expense of parts of Slovakia in 1938 
and Carpatho-Ukraine in 1939 and at the expense of Romania in 
1940. However, Hungary lost these territories again with its defeat 
in World War II. After World War II, the Trianon boundaries 
were restored with a small revision that benefited Czechoslovakia. 

Topography 

Most of the country has an elevation of fewer than 200 meters 
(see fig. 6). Although Hungary has several moderately high ranges 
of mountains, those reaching heights of 300 meters or more cover 
less than 2 percent of the country. The highest point in the coun- 
try is Mount Kekes (1,008 meters) in the Matra Mountains north- 
east of Budapest. The lowest spot is 77.6 meters above sea level, 
located in the Hortobagy. 

The major rivers in the country are the Danube and Tisza. About 
one- third of the total length of the Danube River lies in Hungary; 
the river also flows through parts of the Federal Republic of Ger- 
many (West Germany), Austria, Czechoslovakia, Yugoslavia, and 
Romania. It is navigable within Hungary for 418 kilometers. The 
Tisza River is navigable for 444 kilometers in the country. Less 
important rivers include the Drava along the Yugoslav border, the 
Raba, the Azamos, the Sio, and the Ipoly along the Czechoslovak 
border. Hungary has three major lakes. Lake Balaton, the largest, 
is 78 kilometers long and from 3 to 14 kilometers wide, with an 
area of 592 square kilometers. Hungarians often refer to it as the 
Hungarian Sea. It is Central Europe's largest freshwater lake and 
an important recreation area. Its shallow waters offer good sum- 
mer swimming, and in winter its frozen surface provides excellent 
opportunities for winter sports. Smaller bodies of water are Lake 



67 



Hungary: A Country Study 



Velence (26 square kilometers) in Feher County and Lake Ferto 
(Neusiedlersee — about 82 square kilometers within Hungary). 

Hungary has three major geographic regions: the Great Plain 
(Nagy Alfold), lying east of the Danube River; the Transdanube, 
a hilly region lying west of the Danube and extending to the foothills 
of the Austrian Alps; and the Northern Hills, which is a moun- 
tainous and hilly country beyond the northern boundary of the 
Great Plain. 

The Great Plain contains the basin of the Tisza River and its 
branches. It encompasses more than half of the country's territory. 
Bordered by mountains on all sides, it has a variety of terrains, 
including regions of fertile soil, sandy areas, wastelands, and 
swampy areas. Hungarians have inhabited the Great Plain for at 
least a millennium. Here is found the puszta, long an unculti- 
vated expanse (the most famous such area still in existence is the 
Hortobagy), with which much Hungarian folklore is associated. 
In earlier centuries, the Great Plain was unsuitable for farming 
because of frequent flooding. Instead, it was the home of massive 
herds of cattle and horses. In the last half of the nineteenth cen- 
tury, the government sponsored programs to control the riverways 
and expedite inland drainage in the Great Plain. With the danger 
of recurrent flooding largely eliminated, much of the land was placed 
under cultivation, and herding ceased to be a major contributor 
to the area's economy. 

The Transdanube region lies in the western part of the coun- 
try, bounded by the Danube River, the Drava River, and the re- 
mainder of the country's border with Yugoslavia. It lies south and 
west of the course of the Danube. It contains Lake Ferto and Lake 
Balaton. The region consists mostly of rolling foothills of the Aus- 
trian Alps. However, several areas of the Transdanube are flat, 
most notably the Little Plain (Kis Alfold) along the lower course 
of the Raba River. The Transdanube is primarily an agricultural 
area, with flourishing crops, livestock, and viticulture. Mineral 
deposits and oil are found in Zala County close to the border of 
Yugoslavia. 

The Northern Hills lie north of Budapest and run in a north- 
easterly direction south of the border with Czechoslovakia. The 
higher ridges, which are mostly forested, have rich coal and iron 
deposits. Minerals are a major resource of the area and have long 
been the basis of the industrial economies of cities in the region. 
Viticulture is also important, producing the famous Tokay wine. 

The country's best natural resource is fertile land, although soil 
quality varies greatly. About 70 percent of the country's total ter- 
ritory is suitable for agriculture; of this portion, 72 percent is arable 



68 



The Society and Its Environment 



land. Hungary lacks extensive domestic sources of the energy and 
raw materials needed for industrial development (see Resource 
Base, ch. 3). 

Climate 

Temperatures in Hungary vary from -28°C to 22°C. Average 
yearly rainfall is about sixty-four centimeters. Distribution and fre- 
quency of rainfall are unpredictable. The western part of the country 
usually receives more rain than the eastern part, where severe 
droughts may occur in summertime. Weather conditions in the 
Great Plain can be especially harsh, with hot summers, cold winters, 
and scant rainfall. 

By the 1980s, the countryside was beginning to show the effects 
of pollution, both from pesticides used in agriculture and from in- 
dustrial pollutants. Most noticeable was the gradual contamina- 
tion of the country's bodies of water, endangering fish and wildlife. 
Although concern was mounting over these disturbing threats to 
the environment, no major steps had yet been taken to arrest them 
(see Environmental Problems, ch. 3). 

Population 

Since World War II, Hungary has exhibited several population 
trends that parallel those in other advanced societies. Population 
leveled off after the war and even began to decline. The birth rate 
fell, and people flocked from the countryside to the cities, espe- 
cially to the major urban areas. 

Historical Trends 

Trianon Hungary emerged from World War I with reduced 
borders roughly coterminous with Hungary's present-day borders. 
In 1920 Hungary had about 8 million inhabitants, and by 1941 
the population had grown to approximately 9.3 million (see table 2, 
Appendix). But the country lost about 5 percent of its population 
in World War II, so as of 1949 the population was only about 8.8 
million. Thereafter, the growth rate of the population fluctuated 
substantially. Until the mid-1950s, high fertility and declining mor- 
tality caused rapid population growth. In 1954 the highest post- 
war live-birth rate was reached, at 23 births per 1 ,000 population. 
Subsequently, until the mid-1960s the birth rate declined, but the 
mortality rate was also low. In the late 1960s and early 1970s, the 
birth rate again rose, partly because of demographic measures in- 
troduced by the government in 1967 and 1973 (see Health and Wel- 
fare, this ch.). Because the overall population had begun to age, 



71 




70 



Hungary: A Country Study 



the mortality rate also increased during this period, but it was 
counterbalanced by the higher rate of live births. 

Structure 

Beginning in the late 1970s, the birth rate declined and mortal- 
ity increased. By the early 1980s, Hungary's growth rate had be- 
come one of the lowest in the world. More ominously, beginning 
in 1981, deaths outnumbered births. Over the 1980s, population 
decreased absolutely after peaking at a post- World War II high 
of 10.7 million in 1980. Thus, the 1988 census reported that about 
10.6 million people lived in the country. 

In 1986 the birth rate was 12.1 per 1 ,000 population, up slighdy 
from the postwar low of 11.8 per 1,000 in 1984. However, as re- 
cently as 1975 the birth rate had been 18.4 per 1 ,000, and in 1948 
the birth rate had been 21 per 1,000. One major reason for the 
overall decline of the birth rate appeared to be the increasing num- 
ber of highly educated and economically active women who, as in 
other countries, tended to have fewer children. Age appeared to 
play no role in the declining birth rate. In 1986 women married 
at an average age of 24.6 years, a figure only slightly higher than 
in 1948, when the average age was 24.5. In the 1980s, the typical 
family had only two children (reflecting a dramatic decrease from 
the final decades of the nineteenth century, when the average num- 
ber of children per family had been five). 

Overall, the population of the country was aging. A growing 
proportion of the population was aged fifty-five or older, increas- 
ing from 19.6 percent of the population in 1960 to 24.5 percent 
in 1988. By contrast, in 1988 the proportion of the population under 
fifteen was about 21 percent, which reflected a decrease of about 
4 percent since 1949 and resulted from the declining birth rate. 

Marriage rates fell steadily from the mid-1970s to the mid-1980s 
(see table 3, Appendix). In 1975 the marriage rate was 9.9 per 
1,000. By 1986 that number had declined to 6.8 per 1,000. 
Moreover, in 1980 for the first time, the number of marriages that 
ended because of death or divorce outnumbered the number of mar- 
riages that took place. In 1980 the number of "marriages ceased" 
because of death and divorce was 9.2 per 1,000 population. That 
number rose to 9.3 by 1983, then fell slighdy back to 9.2 by 1986. 

Death rates were relatively high, and they were rising. In 1986 
the death rate was 13.8 per 1,000, as compared with 12.4 per 1,000 
in 1975. In 1986 life expectancy averaged sixty-eight years, up from 
about sixty- six years in 1975. For women in 1986, the average life 
span was almost seventy-two years; for men, it was just under sixty- 
five years. 



72 



Lake Balaton 
Courtesy Scott Edelman 



Settlement Patterns 

In 1945 only 35 percent of the population lived in urban areas. 
After 1945 much of the population moved from the country's less 
developed counties to Budapest and later to its suburbs and to the 
industrial counties of Hajdu-Bihar and Borsod-Abauj-Zemplen. The 
number of urban dwellers grew by more than 50 percent from 1949 
to 1984. In 1978, for the first time in the country's history, more 
people lived in urban centers than in rural areas. In 1949 the popu- 
lation density was about 100 persons per square kilometer. By the 
1980s, that figure had climbed to about 117 persons per square 
kilometer. 

In the late 1980s, nine cities had populations greater than 
100,000. Budapest, the country's focal point for government, cul- 
ture, industry, trade, and transport, was by far the largest city, 
with 2.1 million inhabitants, or 19.2 percent of the country's popu- 
lation. Other major population centers were Debrecen, with 217,000 
inhabitants; Miskolc, with 210,000; Szeged, with 188,000; Pecs, 
with 182,000; Gyor, with 131,000; Nyiregyhaza, with 119,000; 
Szekesfehervar, with 113,000; and Kecskemet, with 105,000. In 
1988 the country had a total of 143 urban centers with more than 



73 



Hungary: A Country Study 



10,000 inhabitants, where about 62 percent of the population 
lived. 

As of 1988, the country had 2,915 settlements with fewer than 
10,000 inhabitants, where 38 percent of the people made their 
homes. Beginning in the 1950s, the smallest villages, or those with 
fewer than 5,000 inhabitants, tended to lose their residents. 
However, the number of people leaving the villages decreased every 
year after 1960. Whereas in 1960 about 259,000 people left the 
villages permanently, that number declined to about 129,000 in 
1986. The number of people leaving the villages exceeded the num- 
ber coming to the countryside by approximately 52,000 people in 
1960. That number had declined to 37,769 in 1980 and 20,814 
in 1986. 

In the 1980s, a substantial number of persons of Hungarian origin 
lived outside the country. Many of these lived in neighboring coun- 
tries (see Relations with Other Communist Neighbors, ch. 4). 
Others had moved even farther from their homeland. In the three 
decades before World War I, some 3 million ethnic Hungarian 
peasants had fled to the United States to escape rural poverty (see 
Social Changes, ch. 1). During and after the Revolution of 1956, 
about 250,000 people left the country, traveling first to Austria and 
Yugoslavia and eventually emigrating to Australia, Britain, Can- 
ada, France, Switzerland, the United States, and West Germany. 
In the late 1980s, about 40 percent of all persons of Hungarian 
origin were living outside Hungary. 

The Hungarian People 

As a result of population transfers after World War II, Hun- 
gary became one of the most ethnically homogeneous countries in 
Eastern Europe. Unlike most Europeans, Hungarians trace their 
lineage to the Finno-Ugric people — an Asiatic tribe. For this rea- 
son, Hungarians have long felt themselves to be distinct from the 
other peoples who live in their midst. 

Ethnic discrimination — except toward the Gypsies — was almost 
nonexistent in Hungary in the 1980s. Particularly after the late 
1960s, the government had made great efforts to ensure fair and 
equal treatment for minority nationalities. Foreign policy consider- 
ations partially explained this liberal policy toward minorities. The 
Romanian and, to a lesser extent, the Czechoslovak governments 
subjected Hungarians in their countries to many kinds of discrimi- 
nation. To provide these governments with incentives to relax their 
pressure against Hungarian minorities, Budapest pursued very liberal 
policies toward its own national minorities and sought to make its 
minority policies a model for other countries in Eastern Europe. 



74 



Square in downtown Szeged 
Courtesy Scott Edelman 



Origins and Language 

The Hungarian people are thought to have originated in an an- 
cient Finno-Ugric population that originally inhabited the forested 
area between the Volga River and the Ural Mountains. Sometime 
between the first and fifth centuries A.D. , after the Ugric and Finnic 
peoples had split, Ugric tribes in the eastern portion of the terri- 
tory moved farther south, intermingling with nomadic Bulgar- 
Turkish peoples (see Early History, ch. 1). Some of these tribes 
settled in the Carpathian Basin in the ninth century A.D. and be- 
came the direct ancestors of today's inhabitants of Hungary. The 
proper name for the largest ethnic group in Hungary is Magyar. 
The word is a derivative of Megyeri, supposedly the name of one 
of the original ten Magyar tribes. Magyar refers specifically to both 
the language and the ethnic group. The words Hungary and Hun- 
garian are derivatives of a Slavicized form of the Turkic words on 
ogur, meaning "ten arrows," which may have referred to the num- 
ber of Magyar tribes. 

Hungarian is the country's only official language. It is a mem- 
ber of the Finno-Ugric family of languages, unrelated to the Indo- 
European language family, which contains the major European 



75 



Hungary: A Country Study 

languages. Within Europe, Hungarian is related to Finnish, Esto- 
nian, Komi, and several lesser-known languages spoken in parts 
of the Ural Mountains region in the Soviet Union. It has a heavy 
admixture of Turkish, Slavic, German, Latin, and French words. 
Hungarian is written in Latin characters. The various dialects are 
intelligible to all Hungarians throughout the country. 

Minority Groups 

In the 1980s, more than 96 percent of the population consisted 
of ethnic Magyars. Major transfers of population had occurred after 
World War II. Substantial numbers of Germans, Czechs, and Slo- 
vaks were resettled in neighboring countries, and many Hungari- 
ans outside the country's borders moved to Hungary. Today 
Hungary has few ethnic minority inhabitants. In the 1980s, the 
population included roughly 230,000 Germans; slightly more than 
100,000 Slovaks; about 100,000 Serbs, Croats, and Slovenes (often 
grouped together as South Slavs); and about 30,000 Romanians. 
In the late 1980s, the Romanian population in the country increased 
significantly as thousands of Romanians fled conditions in their 
homeland and sought refuge in Hungary. About one-third of these 
emigres were ethnic Romanians, and the remainder were ethnic 
Hungarians. In addition, about 500,000 Gypsies, 150,000 Jews, 
and 4,000 Greeks lived in Hungary. The Jewish community was 
a mere remnant of the Jewish population that had lived in the coun- 
try before World War II. During the war, as many as 540,000 Jews 
and 60,000 Gypsies were deported to Nazi extermination camps 
(see World War II, ch. 1). 

Most of the non-Magyar nationalities were bilingual, speaking 
both their own language and Hungarian. In the 1980 census, less 
than 1 percent of the population actually registered as members 
of national minorities, although a far greater number expressed 
interest in aspects of their ethnic culture. National minorities did 
not usually form separate communities but lived interspersed among 
the entire population. 

The Constitution, as well as a sizable body of law, guarantees 
the cultural rights of recognized national minorities. The Consti- 
tution promises them equal rights as citizens, protection against 
discrimination, and access to education in their own language from 
kindergarten to university level (see Constitutional Development, 
ch. 4). Minorities have been able to promote their national cul- 
tures through freedom of association in federations, ethnic clubs, 
and artistic endeavors. They have been able to use their own lan- 
guage in official procedures and could publish newspapers and peri- 
odicals, and broadcast radio and television programs in their own 



76 





Dohdny Synagogue in Budapest 
Courtesy Sam and Sarah Stulberg 



tongue. Actual government policy in the 1980s was fairly consis- 
tent with these promises. In 1984 approximately 55,000 minority 
students were receiving instruction in their mother tongue in 
elementary and secondary schools, up from 21,615 students in 1968. 
When ethnic students did not find the requisite opportunities at 
domestic institutions of higher education, they could study at ap- 
propriate foreign universities. All national minorities had weekly 
newspapers and other publications and sponsored various cultural 
activities. As public discussion in the late 1980s noted, however, 
the minorities had not shared equally in the economic advances 
of recent decades. 

Jews and Gypsies were not officially recognized as national 
minorities, being defined rather as a "religious community" and 
an "ethnic community," respectively. However, the Jews occupied 
a more favorable position in Hungary than they did in other states 
in Eastern Europe. The country's 150,000 Jews formed the third 
largest Jewish community on the European continent, being smaller 
than the Jewish communities in the Soviet Union and France. They 
maintained a high school, library, museum, kosher butcher shops, 
an orphanage, a home for the elderly, a rabbinical seminary, a fac- 
tory producing matzo, and about thirty synagogues. Several pub- 
lications, including newspapers, served the Jewish population. 

The situation of the half million Gypsies, traditionally a poor 
and marginal element in society and subject to discrimination, was 



77 



Hungary: A Country Study 

far less favorable. In 1987 about 75 percent of the Gypsies were 
living at or below the poverty level. About half of them lived in 
settled conditions, holding down jobs. Most spoke Hungarian. The 
Gypsy population had a birth rate that was more than twice as high 
as that of the rest of the population. This circumstance, and the 
fact that the Gypsy crime rate was disproportionately high, con- 
tributed to an apparently growing hostility to Gypsies among the 
Hungarian population. Many citizens perceived the government's 
special programs for Gypsies as undeserved favoritism that deprived 
the rest of the population of needed resources. 

In the mid-1980s, in contrast to its earlier policy of encouraging 
cultural assimilation, the government began to foster a Gypsy ethnic 
and cultural identity and a sense of community and tradition to 
enhance the self-esteem of the Gypsy population. In mid- 1985 the 
government established the National Gypsy Council to represent 
Gypsy concerns to the government and to assist in carrying out 
measures involving the Gypsies. In 1986 the Cultural Association 
of Gypsies in Hungary was founded to help preserve and foster 
Gypsy culture. In 1987 a Gypsy newspaper was established. Despite 
these signs of progress, Gypsies remained particularly vulnerable 
as the economic climate deteriorated in the 1980s. With minimal 
skills, education, and training, they were among the first to lose 
their jobs as unemployment increased. Their health and living stan- 
dard remained well below the national average. 

Social Structure 

Before World War II, Hungarian society was characterized by 
striking inequalities in economic and social status (see Social 
Changes, ch. 1). Landownership was the principal source of wealth, 
because the country was still predominantly rural and agricultural. 
The poverty of millions of landless laborers stood in stark contrast 
to the wealth of a small elite of landowners, bankers, and promi- 
nent businessmen. Early efforts at industrialization provided few 
alternative employment opportunities for the impoverished agricul- 
tural labor force. 

The destruction and turmoil of World War II greatly disrupted 
the traditional social structure. After the communists assumed 
power in 1947, society was in flux for almost two decades (see Post- 
war Hungary, ch. 1). The aim of the new government was to replace 
the old order with a new social structure that was in line with 
Marxist-Leninist ideology. The pace of change slowed in the early 
1960s as the government reduced its efforts at social engineering. 
By the early 1970s, society had settled into a discernible pattern 
in which clear-cut social strata were beginning to reemerge. Changes 



78 



The Society and Its Environment 



that continued to affect the social system during the 1970s and 1980s 
resulted largely from economic growth and urbanization rather than 
from the efforts of communist social planners. 

Interwar Period 

Until World War II, striking inequalities distinguished the dis- 
tribution of wealth, power, privilege, and opportunity among so- 
cial groups. The various social strata had different codes of behavior 
and distinctive dress, speech, and manners. Respect showed to per- 
sons varied according to the source of their wealth. Wealth derived 
from possession of land was valued more highly than that coming 
from trade or banking. The country was predominantiy rural, and 
landownership was the central factor in determining the status and 
prestige of most families. In some of the middle and upper strata 
of society, noble birth was also an important criterion as was, in 
some cases, the holding of certain occupations. An intricate sys- 
tem of ranks and titles distinguished the various social stations. 
Hereditary titles designated the aristocracy and gentry. Persons 
who had achieved positions of eminence, whether or not they were 
of noble birth, often received nonhereditary titles from the state. 
The gradations of rank derived from titles had great significance 
in social intercourse and in the relations between the individual 
and the state. Among the rural population, which consisted largely 
of peasants and which made up the overwhelming majority of the 
country's people, distinctions derived from such factors as the size 
of a family's landholding; whether the family owned the land and 
hired help to work it, owned and worked the land itself, or worked 
for others; and family reputation. The prestige and respect accom- 
panying landownership were evident in many facets of life in the 
countryside, from finely shaded modes of polite address, to spe- 
cial church seating, to selection of landed peasants to fill public 
offices. 

On the eve of World War II, about 4 percent of the population 
owned more than half the country's wealth. Landowners, wealthy 
bankers, aristocrats and gentry, and various commercial leaders 
made up the elite. Together, these groups accounted for only 13 
percent of the population. Between 10 and 18 percent of the popu- 
lation consisted of the petite bourgeoisie and the petty gentry, var- 
ious government officials, intellectuals, retail store owners, and 
well-to-do professionals. More than two- thirds of the remaining 
population lived in varying degrees of poverty. Their only real 
chance for upward mobility lay in becoming civil servants, but such 
advancement was difficult because of the exclusive nature of the 
education system (see Education, this ch.). The industrial working 



79 



Hungary: A Country Study 

class was growing, but the largest group remained the peasantry, 
most of whom had too little land or none at all. 

Although the interwar years witnessed considerable cultural and 
economic progress in the country, the social structure changed lit- 
tle. A great chasm remained between the gentry, both social and 
intellectual, and the rural "people." Jews held a place of promi- 
nence in the country's economic, social, and political life. They 
constituted the bulk of the middle class. During the first four de- 
cades of the twentieth century, Jews made up more than one-fifth 
of the population of Budapest. They were well assimilated, worked 
in a variety of professions, and were of various political persuasions. 

Postwar Societal Transformation 

Even before the communists came to power in 1947, the turbu- 
lent years of World War II had weakened or eliminated much of 
the old stratified society. Devastation from the fighting in 1944 and 
1945, land reforms instituted by the government in 1945, and the 
nationalization of commerce and industry between 1948 and 1953 
destroyed the economic base of the old social system. The country 
lost about 300,000 Jews, including much of the Jewish business 
community, to various war-related causes — deportation, massacre, 
disease, and hunger. Only about 260,500, mostly from Budapest, 
survived (see World War II, ch. 1). 

After the communist takeover, the traditional ruling class was 
virtually eliminated. More extensive land reform undertaken by 
the new regime eventually collectivized the majority of the peasan- 
try. In the countryside, anti-kulak measures and compulsory deliv- 
eries of produce to the state at extremely low prices destroyed the 
prosperous peasant class. (In 1948 the term kulak came to be de- 
fined officially as anyone who owned more than seven hectares of 
land or had a landed income roughly approximating such owner- 
ship. Political conditions caused many with less property also to 
feel threatened.) Rampant inflation disrupted all aspects of eco- 
nomic life. 

In keeping with Marxist-Leninist ideology, during the first de- 
cade of communist rule the government sought to create a class- 
less society through policies such as equalization of incomes, 
collectivization of agriculture, expropriation of property, and tight 
control over educational opportunities (see Rakosi's Rule, ch. 1). 
On the remaining peasants with average incomes and on prosper- 
ous peasants, the government imposed steeply progressive income 
taxes and requisitioned large amounts of produce. Collectivization 
in the early 1950s caused many peasants to seek alternatives to 
agriculture. Many retained their rural residences but commuted 



80 



The Society and Its Environment 



daily or weekly to other jobs, leaving part of the family to con- 
tinue some agricultural work. Others moved to entirely new jobs, 
as government policies promoted rapid development of heavy in- 
dustry (see Economic Policy and Performance, 1945-85, ch. 3). 

The social and economic changes that took place after World 
War II promoted social mobility. During the early years of forced 
industrialization and continuing to a lesser extent until the early 
1960s, the prewar worker strata and peasant strata had enhanced 
opportunities to rise into white-collar positions. Large numbers of 
peasants entered the industrial labor force, and the bureaucracy, 
which grew as a result of centralized planning, was open to per- 
sons from all social groups. 

Some downward mobility also occurred. Disincentives for for- 
merly independent professionals, crafts people, and merchants were 
overwhelming. Opportunities also dwindled for prewar executives 
and managers. Members of the old elite lost property and political 
power and were forced into the middle or lower class. A large per- 
centage of the prewar elite left the country. 

Despite such mobility in the early 1950s, an inegalitarian social 
system remained in place. The new political elite enjoyed mate- 
rial and symbolic privileges, such as access to special stores con- 
taining scarce goods or the free use of secluded and well-guarded 
villas, that separated it from the rest of the population. A second 
stratum of the elite consisted of valuable persons such as directors 
of large enterprises and of the best collective farms. They too lived 
in comparative luxury. The new elite also included intellectuals 
who endorsed the party and its interests. Their task was to pro- 
vide legitimacy for the new regime. In return, they enjoyed living 
standards superior to those of the working class. 

In the aftermath of the Revolution of 1956, career restrictions 
on the prewar middle class and intellectuals began to ease some- 
what as the government ceased most of its social engineering ef- 
forts (see Revolution of 1956, ch. 1). Among workers and peasants, 
political loyalty, although important, could no longer serve as a 
vehicle for upward mobility in the absence of other qualifications; 
a person also needed to have appropriate educational credentials 
or skills. However, political considerations remained paramount 
for persons who , wanted to be part of the ruling political elite. 

As the economic reforms introduced in the 1960s increasingly 
affected all aspects of society, stratified social groups again made 
their appearance. By the mid-1970s, the regime's objective of a 
classless society appeared to be increasingly unattainable. To recon- 
cile ideology with these realities, ideologists began modifying 
Marxist theory. The regime all but abandoned the goal of a classless 



81 



Hungary: A Country Study 



society, ideologists arguing that in a socialist industrial society cer- 
tain skills and occupations were more necessary than others. Thus, 
those persons with greater skills and responsibilities should receive 
more compensation than those making less valuable contributions. 
Ideologists rationalized society's inequalities by maintaining that 
socioeconomic distinctions that evolved under a communist sys- 
tem were qualitatively different from those found in capitalist 
countries. 

Social Relations in the 1980s 

In the 1980s, society was complex and highly differentiated. Social 
scientists agreed that the traditional Marxist-Leninist description 
of the workers, peasants, and intellectuals all cooperating to build 
socialism did not accurately depict modern society. They actively 
sought new categories to account for the great diversity of life-styles 
and income sources but as of the late 1980s had not reached a con- 
sensus concerning modifications in traditional theories. 

Most sociologists spoke of the existence of three major strata in 
society: white-collar workers engaged in mental labor; manual 
laborers; and peasants. The white-collar category comprised every- 
one not involved in physical labor — party and government leaders, 
intellectuals, professionals and teachers, collective farm managers, 
artists, business persons, traders, shop owners, and specialists such 
as building contractors. This category constituted 30.3 percent of 
active earners in 1987, with 14.5 percent classified as professionals. 
The manual labor category encompassed 61.4 percent of the work 
force and included skilled, semiskilled, and unskilled blue-collar 
workers of all ranks and degrees of training and prosperity. The 
peasantry working on both cooperative and state farms made up 
8.3 percent of earners. About 4.6 percent of the work force were 
also "small-scale producers" of various types. 

A survey taken in 1981 revealed the surprisingly widespread na- 
ture of small-scale agricultural production among virtually all so- 
cial categories and occupations; 62.7 percent of active earners lived 
in households that cultivated at least small gardens of fruit trees 
or vegetables. A smaller but still substantial number of active earners 
were involved in animal husbandry (see Agricultural Organiza- 
tion, ch. 3). Sociologists were uncertain about whether or not this 
phenomenon was a temporary phase in industrial development or 
a new category of agricultural worker. 

The Elite 

Persons with some claim to elite status made up no more than 
15 percent of the population in the early 1980s. The elite consisted 



82 



The Society and Its Environment 



of three identifiable groups in the 1980s: political, technocratic, 
and intellectual. The political elite consisted of top party and govern- 
ment leaders. Although some members of this group flaunted their 
status and privileges, most were not highly visible and did not ad- 
vertise their special status. Members appeared to be relatively sen- 
sitive to their public image and did not indulge in conspicuous 
consumption. The technocrats included managers, directors, 
economists, and researchers who supported the regime. The benefits 
they derived from the system were more visible, in the form of 
bonuses and salaries and of the autombiles, villas, apartments, and 
other special advantages that these financial windfalls made possi- 
ble. The intellectual elite, composed of academicians, scientists, 
musicians, artists, writers, journalists, and actors, included many 
persons who were comfortably placed, although others lived in rela- 
tively humble circumstances. They were leaders in setting both so- 
cial and political trends. Members of these favored groups often 
possessed, in addition to relative wealth, the important commodity 
of influence or ''connections." This form of influence gave them 
and their families access to scarce items and limited opportunities, 
such as quality higher education. 

Additional occupations that were likely to be financially rewarding 
included medicine, engineering, and, in some cases, skilled tech- 
nicial jobs, such as electrical work, house painting, plumbing, and 
building contracting. These technicians might have several income 
sources from their private work in addition to salaried work. In- 
tellectuals who lacked high salaries but supplemented their income 
through various types of consulting work, such as editing, trans- 
lating, and so forth, were also financially secure. 

Prosperous individuals enjoyed a very comfortable standard of 
living. Families who could afford private holiday and weekend 
houses built them on the shores of Lake Balaton, along rivers, and 
in mountain areas. From 1981 through 1987, a total of 30,397 pri- 
vate "holiday houses" were built. As more people owned their own 
automobiles, weekend trips became increasingly popular. During 
the 1970s, more people, even those in relatively modest circum- 
stances, began to travel abroad. In 1981 a record 5.5 million Hun- 
garians traveled outside Hungary. Of these, about 477,000 traveled 
to capitalist countries, in Europe or overseas. As a result of finan- 
cial constraints, the number of travelers dropped somewhat in the 
mid-1980s. Regulations concerning the exchange of foreign cur- 
rency permitted travel to capitalist countries no more than once 
a year on organized tours or once every three years on an individual 
basis. If a traveler had access to additional sources of foreign cur- 
rency, however, he or she could travel more frequently. 



83 



Hungary: A Country Study 



The Disadvantaged 

To achieve an acceptable living standard or to improve their 
modest circumstances, most Hungarians had to work hard; often 
they held more than one job. Continuing inflation in the 1980s 
created additional pressures on families with moderate income. 
Although the government introduced the five-day workweek 
throughout the economy between 1980 and 1985, more persons 
worked extended workdays to increase household income. It was 
estimated that three families in four had some source of additional 
income not resulting from work in state or collective sources. Many 
families were thus able to achieve a comfortable, if still modest, 
life-style. 

A number of disadvantaged groups also tried to make ends meet. 
Western analysts estimated that between 25 and 40 percent of the 
population lived below the poverty level, which, in the mid-1980s, 
was defined as a monthly income below 5,200 forints (for value 
of the forint — see Glossary). Average monthly wages (6,000 forints) 
were only 10 to 15 percent above this level. In 1988, according 
to data issued by the Central Statistical Office, between 1.5 mil- 
lion and 3 million people qualified as "socially poor" (out of a popu- 
lation of 10.6 million). These figures included 40 to 50 percent of 
all retired persons on pensions, about half of families with two chil- 
dren, and from 70 to 90 percent of families with three or more chil- 
dren. Other poor groups were low-paid employees of the state and 
industry, such as postal employees, various semiskilled and un- 
skilled workers, and minor bureaucrats. Some of these people 
supplemented their income through second jobs. Single heads of 
households were often poor. In addition, persons working on less 
productive collective farms and those living on isolated homesteads 
(tanyas) far from rural centers and even villages, were likely to have 
scanty incomes. 

Although Hungary's living standard was higher than that found 
in neighboring socialist states in the 1980s, the sharp disparities 
became the subject of investigative reports, letters to newspaper 
editors, and various radio and television talk shows. Economic 
problems were clearly causing concern and some demoralization 
among the people. The government adopted a variety of austerity 
measures in response to the country's economic stagnation and stag- 
gering foreign debt. These measures included increases in the prices 
of basic items, such as flour, bread, gasoline, and household energy, 
and various consumer items such as cigarettes. A new value-added 
tax (see Glossary) on most goods and services and a stricter income 
tax law were also introduced (see Economic Regulators, ch. 3). 



84 



The Society and Its Environment 

In 1988 official sources reported an inflation rate of 17 percent. 
Western analysts estimated that the inflation rate could be as high 
as 25 to 30 percent. By 1989 the average real wage had dropped 
to its 1973 level. 

Since the mid-1970s, considerable tension has emerged between 
the rich and the poor, partially because of the long-professed 
egalitarian views of the regime. During the immediate postwar 
period, the leadership had advocated (although it had never fully 
practiced) a general egalitarianism that, combined with the prevail- 
ing scarcity, led people to elevate self-denial as a socialist virtue. 
When conditions subsequently improved, the leadership and the 
population both were confused about what form the proper socialist 
way of life should take. The younger generation in particular took 
pleasure in the increasing comforts of life, but some members of 
the older generation feared a resurgence of a "bourgeois" life-style 
and "consumerism." Although poverty remained widespread, 
socialism's sponsorship of rapid economic development had offered 
many persons a chance to change their way of life and socioeconomic 
position in a manner that was unimaginable before the war. As 
living standards improved, the conviction had grown among sig- 
nificant segments of the population that economic growth and ris- 
ing standards were inevitable and that ongoing problems — poverty 
and unequal opportunity — were remnants of the old order, cer- 
tain to be overcome. Then in the mid-1970s, economic growth had 
slowed. Although inequalities were much reduced from the prewar 
scale, they still existed. They were less pronounced in salary differ- 
ences than they were in working conditions, working hours (in- 
cluding their flexibility), housing conditions, possession of durable 
consumer items, and, most of all, general life-style. Even more trou- 
bling was the appearance of new inequalities, with favored groups 
consolidating their advantageous positions. The regime had few 
concrete answers for these problems. Leaders could only point out 
that the country had no models to follow in developing a socialist 
system to meet its needs. 

In the late 1980s, the worsening economic conditions were a dis- 
appointing contrast to the successes and significant improvements 
in living standards achieved in the 1960s and 1970s. In 1987 the 
official news agency estimated the number of unemployed per- 
sons to be 30,000 to 40,000. In 1988 the press began report- 
ing frankly on the noticeable numbers of beggars and homeless 
persons on the streets of Budapest. The media also noted that squat- 
ters were becoming a problem, especially families coming from the 
countryside seeking employment and moving into vacant apart- 
ments. 



85 



Hungary: A Country Study 

Social Institutions 

In the 1980s, severe social and economic problems took their 
toll on the family. Harsh economic conditions meant that most 
women had to work and most men had to hold second and even 
third jobs. These factors, combined with a housing shortage, sub- 
jected the family to considerable stress. Yet the harsh economic 
conditions also forced many people to turn inward, and they found 
in their families a refuge from the difficult economic realities. 

In the postwar period, the regime had designed its mass organi- 
zations to take over some of the traditional socialization functions 
of the family. Thus, the mass organizations served as "transmis- 
sion belts," attempting to inculcate regime values, and relaying 
and interpreting the policies of the Hungarian Socialist Workers' 
Party (HSWP) to rank-and-file members and to the general pub- 
lic (see Hungarian Socialist Workers' Party, ch. 4). In the late 
1980s, some Western observers considered the mass organizations 
sponsored by the regime to be in a moribund state, hopelessly out- 
classed by newer, more spontaneous collective efforts (see Dissent 
and Freedom of Expression, this ch.). In response, some mass or- 
ganizations liberalized their programs and distanced themselves 
from the regime. 

Early in its history, the communist party considered the churches 
as competitors for the allegiance of the people. Therefore, the re- 
gime actively persecuted the churches, especially the Roman Catho- 
lic Church. After the Revolution of 1956, the regime relaxed its 
pressure on the churches, viewing them more as partners than as 
adversaries. By the late 1980s, the government allowed the churches 
wide latitude and eliminated virtually all legal and institutional re- 
strictions on church activities. 

The Family 

In traditional Hungary, the family served as the basic social unit. 
It had multiple functions, providing security and identity to in- 
dividuals and reinforcing social values. In rural areas, it was also 
the basic economic unit— all members worked together for the 
material well-being of the whole family. Even before World War 
II, however, family cohesion began to decrease as members be- 
came increasingly mobile. But the process of change quickened after 
the communist takeover. Intensive industrialization and forced col- 
lectivization prompted many of the younger peasants to leave 
agriculture for industrial work or other jobs in the cities, some com- 
muting long distances between home and work (see Postwar Socie- 
tal Transformation, this ch.). Patterns of family life changed. A 



86 



The Society and Its Environment 



growing number of women worked outside the home, and chil- 
dren spent much of their time in school or in youth organization 
activities. Family members spent less time together. The empha- 
sis in daily life shifted from the family to the outside world. Most 
members of the extended family came together only for important 
ceremonies, such as weddings or funerals, and other special oc- 
casions. 

Changes in the traditional roles of family members were dra- 
matic. The dominance of the male head of the family diminished. 
The remaining family members had greater independence. Most 
notably, the role of women changed. By 1987 about 75 percent 
of working- age women were gainfully employed. Even peasant 
women became wage earners on the collective farms. This fact al- 
tered women's status in the family and the community. However, 
most observers agreed that in the 1980s males were still viewed 
as the head of most households, if only because of their generally 
higher incomes. 

As women increasingly worked outside the home, their husbands 
and children assumed some domestic functions, helping with house- 
hold chores more than they had before. Outside institutions such 
as schools and nurseries also took over tasks formerly carried out 
by women within the home. Nevertheless, time budget studies in- 
dicated that women were still responsible for most of the child rear- 
ing and housework despite their employment outside the home. 
Women usually worked longer hours than men. Working women 
spent an average of more than four hours each day on household 
chores, including child care, while men averaged ninety- seven 
minutes in such activities. However, the time spent by women in 
outside employment was not correspondingly shorter than that of 
men, averaging only 1 .5 hours less than men. Women devoted less 
time than men to leisure activities, such as watching television, so- 
cializing, and engaging in sports. (According to the same studies, 
women did read approximately as many books as men but spent 
much less time on newspapers and periodicals.) 

The state viewed marriage as a secular matter, governed by civil 
law. A civil marriage was mandatory, but couples were allowed 
to supplement the procedure with a religious ceremony. The greatest 
number of both men and women married between the ages of 
twenty and twenty-four (44.6 percent of all men and 41.3 percent 
of all women for those marrying in 1987). The law assigned equal 
rights and obligations to both partners in a marriage. 

In the 1980s, social analysts considered the family to be an in- 
stitution under considerable stress. Statistics supported this con- 
tention. From 1975 to 1986, the divorce rate increased from 2.5 



87 



Hungary: A Country Study 



to 2.8 per 1,000 population. In the 1980s, every third marriage 
ended in divorce. The rate of remarriage also dropped significantly. 
In 1987 about 66,000 marriages were performed, and about 95,600 
marriages were terminated as a result of death or divorce. Almost 
12 percent of all families were headed by a single parent. 

A primary source of stress within families, according to many 
observers, was the scarcity of adequate housing, especially for young 
families (see Health and Welfare, this ch.). In many families, mem- 
bers faced the pressures and exhaustion of trying to hold down mul- 
tiple jobs. Another source of tension within families was the 
prevalence of commuting. Although in 1960 one in every eight 
workers commuted, in the 1980s one in every four commuted. One 
million or more villagers commuted to the cities to work. This figure 
did not include long-distance commuters who lived in temporary 
quarters near their workplaces and returned home weekly or more 
infrequently. In 1980 such workers numbered about 270,000, bring- 
ing the total number of commuters to about 1.5 million. 

Despite the statistics, most observers found that the cohesive force 
of the family remained relatively strong in the 1980s. For many 
people, the family continued to be a source of personal comfort 
and reassurance in the face of worsening economic conditions. The 
traditional sense of family loyalty and responsibility also seemed 
to survive. Family members continued to help each other in find- 
ing jobs or housing, in gaining admission to schools, and in provid- 
ing for each other in times of need. 

Mass Organizations 

Until the late 1980s, the law contained no provision for volun- 
tary, independent associations of people interested in influencing 
social or political policy. Potential independent groups had no con- 
crete channels by which to gain regime approval. During four de- 
cades of communist rule, clear legal status belonged only to such 
mass organizations as the Communist Youth League, official trade 
unions, the National Council of Hungarian Women, and a vari- 
ety of nonpolitical associations catering to narrow, special interests 
of the population. Until the late 1980s, authorities actively dis- 
couraged the formation of unofficial groups. 

Trade Unions 

In the mid-1980s, official trade unions had almost 4.4 million 
members, or about 96 percent of all persons living on wages and 
salaries. The growth of trade unions was mainly a post- World War 
II phenomenon; before the war, unions had a total membership 
of only about 100,000 (mostly crafts people). After the communist 



88 



The Society and Its Environment 



takeover, the unions were supervised by the National Council of 
Trade Unions (Szakszervezetek Orszagos Tanacsa — SZOT), 
elected by a national congress. SZOT had nineteen officially recog- 
nized unions, organized by industrial branch. Trade unions theo- 
retically had great powers, but they traditionally had made little 
use of them. For example, SZOT had a legal right to veto deci- 
sions made by the government concerning the workers. In prac- 
tice, the unions' historic inability to strike made this authority 
meaningless. The government specified overall policy concerning 
work requirements and wages. Most day-to-day decisions about 
hiring and firing were made by the management staffs of enter- 
prises and collective farms. Unions did have great influence in the 
use of the social and cultural funds of enterprises and in industrial 
safety issues. Trade unions also controlled the administration of 
health care and holiday resorts. However, in the 1980s subsidies 
from the central government for these purposes were diminishing, 
so that maintaining even the existing level of services and ameni- 
ties was difficult. 

In 1985, in a move to increase its appeal to the country's youth, 
SZOT set up its own organization to represent young people, 
separate from the Communist Youth League. This organization 
was the first, other than the Communist Youth League itself, to 
officially represent young people. According to the authorities, the 
Communist Youth League was to remain the only political mass 
organization for youth, while the trade union youth would focus 
on issues of the workplace, social and cultural programs, and other 
traditional concerns of trade unions. Trade union members under 
thirty years of age could be members of the unions' new youth 
sections. 

In the late 1980s, Western analysts detected a significant easing 
of restrictions on trade union activity in general. The official unions 
became increasingly outspoken, criticizing such practices as the re- 
quirement for overtime work and other austerity measures. In pub- 
lic discussions, both critics and union representatives openly 
admitted that the unions as constituted inspired little confidence 
in workers. In 1988 the press began reporting some brief strikes 
among workers in officially recognized unions, revealing that the 
outcomes of the strikes had been favorable to the workers. At the 
same time, some professionals and blue-collar workers made ef- 
forts to form independent unions that were not subordinate to 
SZOT. In May 1988, the Democratic Union of Scientific Work- 
ers, the first independent trade union established in Eastern Europe 
since Poland's Solidarity, was founded. Social scientists at research 
institutes of the Academy of Sciences, the country's premier research 



89 



Hungary: A Country Study 

organization, were the first members of the new union. The union's 
program included a call for the end of discrimination against profes- 
sionals based on their political views. Additional researchers and 
teachers from other institutions soon joined, raising the number 
of members to more than 4,000 by December 1988. Several smaller 
unions also came into existence. Initially, the membership of such 
independent organizations appeared to be limited to white-collar 
workers. The success of these fledgling attempts was uncertain, but 
after initial hostility from authorities, the groups were permitted 
to function. 

Women 

In the 1980s, the principal women's organization was the Na- 
tional Council of Hungarian Women. Its official role was to edu- 
cate women socially and politically and to participate in devising 
new laws and regulations that affected women. The organization 
had a network of local and regional committees, whose members 
engaged in voluntary social work. In 1985 the council had about 
32,000 designated female "stewards," and about 160,000 women 
were said to be active in the organization. 

Youth 

The Communist Youth League (Kommunista Ifjusagi Szovet- 
seg — KISZ) catered to young people. KISZ was the HSWP's offi- 
cial youth organization (see Hungarian Socialist Workers' Party, 
ch. 4). It claimed to represent all the country's youth and sought 
to educate young people politically and to supervise political as well 
as some social activities for them. KISZ was the most important 
source of new members for the party. Its organizational framework 
paralleled that of the HSWP and included a congress, central com- 
mittee, secretariat, and regional and local committees. Member- 
ship was open to youth from the ages of fourteen to twenty-six years, 
but most of the full-time leaders of the organization were well over 
the age limit. In the 1980s, KISZ had about 800,000 members. 
Membership was common, if rather pro forma, among university 
students (96 percent of whom were members) but was lower among 
young people already working (31 percent). 

In the late 1980s, KISZ undertook sweeping reforms of its own 
organizational structure. In April 1989 delegates to the organiza- 
tion's national congress voted to change the name of the organiza- 
tion to the Democratic Youth Federation. According to declarations 
adopted by the congress, the newly refashioned federation would 
be a voluntary league of independent youth organizations and would 
not accept direction from any single party, including the HSWP. 



90 



The Society and Its Environment 



A separate organization within KISZ, the Association of Young 
Pioneers, was formed for youngsters in elementary school. Mem- 
bership was open to children from six to fourteen years of age. The 
Young Pioneers served many of the same functions as the Boy 
Scouts and Girl Scouts in the West. The organization also attempted 
to explain to children the basic tenets of the Marxist-Leninist world- 
view. Joining the Young Pioneers was a matter of course for most 
youngsters in elementary school. Most meetings took place in class- 
rooms of primary schools. Bands of Young Pioneers could be seen 
on many ceremonial occasions, dressed in the organization's charac- 
teristic white shirts and red ties. The summer camps sponsored 
by the organization were a highlight of the year for many children. 

Other Popular Groups 

In addition to the traditional mass organizations, a myriad of 
other officially approved clubs and associations focused narrowly 
on such areas as agriculture, architecture, history, mathematics, 
music, the sciences, and so forth. A survey in the early 1980s 
counted 6,570 cultural, professional, and sports associations (63 
percent of which had been established after 1945), ..1th a total of 
2.3 million members. The largest associations were the Hungar- 
ian Autoclub, with about 291,000 members in late 1982, and the 
National Association of Stamp Collectors, with approximately 
157,000 members. Also worthy of note was the Home Defense Sport 
Federation, which promoted physical fitness for the masses and 
sponsored premilitary training for young people. Many Hungari- 
ans were also avid sports fans and participants. In 1985 more than 
1.2 million persons belonged to the country's 3,860 sports clubs. 
The most popular sport was soccer. Chess was also widely played. 

Religion and Religious Organizations 

Particularly during the early years of communist rule, the 
churches had faced extensive harassment and persecution by the 
regime. Many clergy had been openly hostile to the new govern- 
ment at its inception. The new secular authorities, for their part, 
denounced such attitudes as traitorous, and they mistrusted the 
churches as a source of opposition. 

The most protracted case of tension and open conflict involved 
the Roman Catholic Church. In 1945 the church lost its landed 
property in the first postwar land reform, which occurred before 
the communist takeover. Most Catholic religious orders (fifty-nine 
of a total of sixty-three groups) were dissolved in 1948, when reli- 
gious schools were also taken over by the state. Most Catholic as- 
sociations and clubs, which numbered about 4,000, were forced 



91 



Hungary: A Country Study 

to disband. Imprisoned and prosecuted for political resistance to 
the communist regime were a number of clergy, most notably Jozsef 
Cardinal Mindszenty. primate of the Catholic Church in Hungary 
(see Postwar Hungary, ch. 1). In 1950 about 2.500 monks and 
nuns, about one-quarter of the total in Hungary, were deported. 
Authorities banned sixty-four of sixty-eight functioning religious 
newspapers and journals. .Although in 1950 the Catholic Church 
accepted an agreement with the state that forced church officials 
to take a loyalty oath to the Constitution, relations between the 
church and the state remained strained throughout the decade. 

During the 1960s, the two sides gradually reached an accom- 
modation. In 1964 the state concluded a major agreement with the 
Vatican, the first of its kind involving a communist state. The docu- 
ment ratified certain episcopal appointments already made by the 
church, although it did not settle Mindszenty' s long-standing case. 
As before, the agreement mandated that certain individuals in po- 
sitions in the church were obliged to take an oath of allegiance to 
the Constitution and the laws of the country. But this oath was 
to be binding only to the extent that the country's laws were not 
in opposition to the tenets of the Catholic faith. The church con- 
ceded the state's right to approve selection of high church officials. 
Under the agreement, the Hungarian Roman Catholic Church 
could staff its Papal Institute in Rome with priests endorsed by 
the government, and each year even* diocese in the country would 
send a priest to Rome to attend the institute. For its part, the 
government promised not to interfere with the institute's work. 

Following the agreement, many vacant church posts were filled. 
Gradually, the organizational structure of the church was reestab- 
lished, and congregations became active again. The church began 
to take a role in the ceremonial life of the country. Relations be- 
tween church and state warmed particularly after 1974. when the 
Vatican removed Mindszenty from his office (in 1971 Mindszenty 
had received permission to leave the country after spending many 
years in the American embassy in Budapest, where he had fled 
to escape detention by the authorities). The new primate, Laszlo 
Cardinal Lekai. who held office from 1976 to 1986. sponsored a 
policy of "small steps." through which he sought to reconcile differ- 
ences between church and state and enhance relations between the 
two through "quiet, peaceful dialogue." He urged Catholics to 
be loyal citizens of the state and simultaneously to seek personal 
and communal salvation through the church. 

Evidence suggests that a serious falling away from religion among 
Catholics (especially a drop in attendance at church services) oc- 
curred only during the 1960s and 1970s, ironically during the period 



92 




when the government no longer energetically persecuted the church. 
Some observers have suggested that in the 1950s the church earned 
popularity as an anticommunist institution because of widespread 
dissatisfaction with material, political, and cultural trends within 
the country. As conditions improved, the church no longer served 
as a focal point for the disaffected. Some Catholics, both lay and 
clerical, felt that Lekai, in his eagerness to smooth relations be- 
tween church and state, went too far in compromising the church's 
position. 

The Catholic Church of the 1980s had difficulty providing ade- 
quate services to all communities. Its clergymen were aging and 
decreasing in number. Whereas in 1950 the church had had 3,583 
priests and 1 1 ,538 monks and nuns, in 1986 it had only about 2,600 
priests and a mere 250 monks and nuns. It was clear by this time, 
however, that the church was reaping tangible benefits from its 
relationship with the state. For example, in the 1980s the Catholic 
orders of the Benedictines, the Franciscans, the Piarists, and Our 
Lady's School Sisters were again functioning in limited numbers. 
A new order of nuns, the Sisters of Our Lady of Hungary, received 
permission to organize in 1986. In the 1980s, the church had six 
seminaries for training priests and a theological academy in 
Budapest. 

After the communist takeover, the historic Protestant churches 
became even more thoroughly integrated into the new state system 



93 



Hungary: A Country Study 

than did the Catholic Church. They were not a source of organized 
dissent. The Reformed (Calvinist), Unitarian, and Lutheran 
churches all reached accommodation with the government in the 
late 1940s (as did the small Greek Orthodox and Jewish commu- 
nities). These agreements guaranteed the Protestants the right to 
worship and brought about some financial support (contingent after 
1949 on the loyalty oath). Some Protestant leaders praised the agree- 
ments as heralding a new era in which all religions would be treated 
equally. However, a number of Reformed clergy and followers be- 
came active supporters of the Revolution of 1956. After the Revo- 
lution failed, many of these people joined "free churches" (including 
the Baptist, Methodist, and Seventh-Day Adventist churches), 
which functioned apart from the historic Protestant churches. 

In 1986, according to Western estimates, about 67.5 percent of 
the population was Roman Catholic, 20 percent was Reformed 
(Calvinist), 5 percent was unaffiliated, and 5 percent was Lutheran 
(its members were in particular the German and Slovak minori- 
ties but also included many ethnic Magyars). Other Christian 
denominations included Uniates, Orthodox, and various small Pro- 
testant groups, such as Baptists, Methodists, Seventh-Day Adven- 
tists, and Mormons. Most of these smaller groups were affiliated 
with the national Council of Free Churches and were dubbed free 
churches as a group. The country also had 65,000 to 100,000 prac- 
ticing Jews. The remainder of the population did not subscribe to 
any religious creed or organization. Nor was any single church or 
religion particularly associated with the national identity in the 
popular mind, as was the Catholic Church in Poland. 

Western observers concluded that although the country possessed 
about 5 million practicing believers, religion did not provide a viable 
alternative value system that could compete with the predominant 
secularism and materialism promoted both by the government and 
by trends within an increasingly modern society. Thus, religion 
was unlikely to become a vehicle for dissent as in Poland or, in 
a more limited way, in the German Democratic Republic (East 
Germany). 

A noteworthy phenomenon of the early 1980s was the appear- 
ance of thousands of intensely active prayer and meditation groups 
within Catholic and Protestant congregations. Some of these groups 
came into conflict with the church hierarchies over military ser- 
vice and other aspects of cooperation with the government (see Dis- 
sent and Freedom of Expression, this ch.). 

The Constitution guarantees freedom of conscience and religion. 
Until 1989, however, these guarantees were severely circumscribed 



94 



Village church in Mindszentpuszta 
Courtesy John Tarafas 




by the State Office for Church Affairs, which regulated the activi- 
ties of the churches. On June 15, 1989, the government abolished 
this office. In its place, the government planned to establish a "Na- 
tional Church Council" that would act as a "consultative organi- 
zation," not as an instrument for the control of the churches. In 
addition, the Ministry of Culture assumed responsibility for church 
affairs. Also in 1989, the government submitted for public debate 
new "Principles of a Law on Freedom of Conscience, the Right 
of Free Exercise of Religion, and Church Affairs." The document, 
prepared by representatives of the churches, banned discrimina- 
tion against believers, acknowledged the churches as legal entities, 
and recognized their equality before the law. Yet in the late 1980s, 
the state's financial support of all major churches continued to give 
it considerable leverage in influencing church affairs. 

Between 1945 and 1986, religious communities erected or re- 
paired 306 Roman Catholic, 46 Calvinist (Reformed), 33 Lutheran, 
and 23 Uniate churches. Congregations of the free churches built 
185 new structures, and the Jewish community built a new syna- 
gogue. The various denominations maintained their own modest 
publishing organs that produced newspapers, periodicals, and 
books. Occasionally, religious services were broadcast over radio. 
The various churches and denominations each supported (collec- 
tively, in the case of the free churches) at least one theological acad- 
emy or college for the training of clergy. However, the number 



95 



Hungary: A Country Study 

of students was small; 75 students graduated out of a total of 648 
students enrolled in such institutions in 1987. 

Education 

Before the communist assumption of power in 1947, religion was 
the primary influence on education. The Roman Catholic Church 
sponsored and controlled most schools, although some other reli- 
gious denominations (Reformed, Lutheran, and Unitarian) as well 
as the government ran some schools (see Religion and Religious 
Organizations, this ch.). The social and material status of students 
strongly influenced the type and extent of schooling they received. 
Education above the elementary level was generally available only 
to the social elite of the country. In secondary and higher-level 
schools, a mere 5 percent of the students came from worker or 
peasant families. Only about 1 or 2 percent of all students entered 
higher education. 

Before the communist educational reforms, secondary education 
was traditional. The curriculum stressed the humanities, often at 
the expense of the sciences. Technical education received relatively 
little attention, despite the existence of technical and vocational 
schools. 

In 1946 the government established the principle of free educa- 
tion as a right of all citizens, even before the communist assump- 
tion of power. In 1948 the new communist government secularized 
almost all schools and placed them under state control, giving over- 
sight to the Ministry of Education. The churches retained only a 
few institutions to train their clergy. 

The Marxist-Leninist government made major changes in the 
education system. Its goal was to mold citizens to work for the 
benefit of society. The reforms stressed technical and vocational 
training. Political education also became a high priority. Young 
people were to receive a thoroughly Marxist- Leninist education 
both within and outside the school framework (see Ideology, ch. 4). 
Education also sought to promote a thorough understanding of the 
political system, an understanding fostered also by youth organi- 
zations functioning outside the formal educational process. Russian- 
language study became compulsory from the upper levels of the 
general school (also known as the elementary school) through the 
university. Many Soviet professors taught at Hungarian universi- 
ties, many textbooks were adaptations of the work of Soviet authors, 
and Russian-language clubs were established. 

Marxism-Leninism had become the backbone of the curriculum 
by the early 1950s. A brief period of liberalization followed the death 
of Soviet dictator Joseph Stalin in 1953 (see Rakosi's Rule, ch. 1). 



96 



The Society and Its Environment 



After the failure of the Revolution of 1956, authorities reverted 
to their former emphasis on Marxist-Leninist indoctrination. 
However, they did modify the earlier policy of Sovietization in favor 
of a more Hungarian orientation. 

The regime's ideology also dictated the need to increase the total 
number of students enrolled in higher education, primarily through 
recruitment from the working class and the peasantry. Whereas 
in 1939 only 13,000 students were enrolled in higher education, 
by 1970 this number had grown to 86,000. To be sure, some of 
these students were participating in correspondence or evening 
courses rather than regular daytime classwork. Adults were en- 
couraged to study through schools at the workplace and correspon- 
dence courses. Authorities also tried to expand the proportion of 
students from lower social strata by setting a worker and peasant 
quota of about 60 percent at all places available in higher educa- 
tion. Students seeking admission to these institutions were assessed 
according not only to their abilities but also to their social origins; 
the children of families belonging to the formerly privileged classes 
rarely were given the opportunity to study. When students from 
modest socioeconomic backgrounds lacked the requisite academic 
training, one-year remedial courses were available to assist them. 
In 1963 this class-oriented system of recruitment was abandoned. 
Nevertheless, political considerations continued to play a role in 
admissions procedures at secondary schools and universities. 

In 1986 the country had 3,540 elementary schools, 587 secon- 
dary schools, 278 apprentice schools, and 54 institutions of higher 
education, of which 18 were universities with several faculties and 
programs extending five or more years. Of the latter, four were 
general universities, three were technical universities, six were 
agricultural universities, four were medical universities, and one 
was a university of economics. The country had five specialized 
university-level institutes for the arts and physical education. 

Attendance at school was mandatory from age six to sixteen. All 
students attended general schools for at least eight years. Tuition 
was free for all students from age six up to the university level. 
Most students actually began their schooling at five years of age; 
in 1986 approximately 92 percent of all children of kindergarten 
age attended one of the country's 4,804 kindergartens. By 1980 
every town and two-thirds of the villages had kindergartens. Par- 
ents paid a fee for preschool services that was based on income, 
but such institutions were heavily subsidized by the local councils 
or enterprises that sponsored them. 

By 1980 only 29 percent of males aged fifteen years or older and 
38 percent of females aged fifteen years and older had not completed 



97 



Hungary: A Country Study 



eight years of general school, compared with 78 percent of such 
males and 80 percent of such females in 1949. About half of the 
students who completed the general schools subsequently completed 
their education in two years, through vocational and technical train- 
ing. The remaining students continued their studies in a four-year 
gymnasium or trade school. 

In 1985 about 98,500 undergraduate students attended the coun- 
try's higher educational institutions. Almost 10 percent of the popu- 
lation aged eighteen to twenty-two was enrolled in regular daytime 
courses at institutions of higher education. In the 1980s, about 40 
percent of regular students came from worker or peasant families. 
Most of these students either were exempt from tuition payments 
or, more often, received financial assistance. In the 1980s, applicants 
outnumbered places available in the colleges and universities. As 
a result, many persons enrolled in evening and correspondence 
courses, although these courses were not considered to be equal 
in quality to regular day instruction. 

In the 1985-86 academic year, about 2,500 foreign students 
studied full time in Hungary. About half were European students; 
the remainder came from developing countries. In the same year, 
about 1,300 Hungarian students were studying in foreign institu- 
tions of higher education, most of them in neighboring countries. 

In the 1980s, the average educational attainments of Hungar- 
ians ranked in the middle, in comparison with those of citizens of 
other European countries. The quality of Hungary's education sys- 
tem was substantially inferior to those of East Germany, Czecho- 
slovakia, and Sweden and was somewhat lower than those of 
Austria, Belgium, Finland, Norway, Poland, and West Germany. 
Many Hungarians voiced concerns about the quality of their 
schools. Critics noted, among other things, that although Switzer- 
land spent 18.8 percent of its national budget on education, Brazil 
18.4 percent, and Japan 19.2 percent, Hungary allotted only 6.6 
percent of its state budget to education. In the 1980s, the country 
experienced shortages of both classrooms and teachers, so that 
primary- school classes sometimes contained up to forty children. 
In many areas, schools had alternate morning and afternoon school 
shifts in order to stretch facilities and staff. Moreover, not all 
teachers received proper training. 

At the university level, in the late 1980s some students and faculty 
were calling for greater autonomy for institutions of higher educa- 
tion and were demanding freedom from ideological control by both 
the government and the party. They decried the prominence given 
to the study of Marxism-Leninism and the Russian language in 
university curricula. The public was also distressed over the fact 



98 



The Society and Its Environment 



that, despite the government's remedial measures during previ- 
ous decades, in the 1980s children of the intelligentsia had a far 
greater chance of entering institutions of higher learning than did 
the children of agricultural workers and unskilled industrial workers. 

Health and Welfare 

After the communist government assumed power in Hungary, 
it devoted much attention to meeting the specific health care and 
social security needs of the population. In comparison with prewar 
standards, the average citizen received far better health care and 
social assistance as a result of the government's policy. Such im- 
provements did not extend to housing; like other countries in 
Eastern Europe, Hungary has faced a severe housing shortage since 
the late 1940s. However, unlike most other countries in Eastern 
Europe, since the mid-1970s the government has encouraged 
citizens to build their own housing. This policy has eased the short- 
age somewhat, but as of 1989 the lack of adequate housing remained 
a serious problem. 

Health 

The modern social welfare system was largely a product of the 
1970s and 1980s, although setting of goals, initial planning, and 
more modest coverage for citizens began in previous decades. 
Amendments to the Constitution in 1972 guaranteed universal as- 
sistance for the ill, the aged, and the disabled. The Public Health 
Act of 1972 specifically guaranteed that beginning in 1975 all per- 
sons would have free medical care as a right of citizenship. The 
Social Insurance Act of 1975 provided that insurance conditions 
and benefits, which had been different for various occupational 
groups, become uniformly applied to all citizens. In 1982 even those 
persons involved in private economic activity became eligible for 
full social insurance coverage (including generous sickness and dis- 
ability pay), instead of being limited to pension and accident 
coverage. 

The social welfare system expanded steadily. According to offi- 
cial statistics, the percentage of the population's income represented 
by social benefits in cash (including social insurance payments) and 
kind (including free health care) was 17.4 percent in 1960, 22.8 
percent in 1970, 27.3 percent in 1975, and 32 percent in 1980. 

The state health care system was highly centralized. Increasingly 
specialized and sophisticated services were available at the level 
of the district (the country had 4,374 districts in 1984), municipal- 
ity, county, region, and nation. Each district had a designated phy- 
sician to whom its inhabitants first turned for care under the public 



99 



Hungary: A Country Study 

health system. If an ailing person required a specialist, the district 
physician made the appropriate referral. In the 1980s, the availa- 
bility of physicians, nurses, and hospital beds was high by inter- 
national standards. In 1986 the country had 31,154 physicians, or 
about one physician per 299 inhabitants (up from one physician 
per 909 inhabitants in 1950, one per 637 inhabitants in 1960, one 
per 439 inhabitants in 1970, and one per 398 inhabitants in 1974). 
The country had 100 hospital beds per 10,000 inhabitants (up from 
55.8 beds per 10,000 inhabitants in 1950, 71.1 in 1960, and 85.5 
in 1974). The country had 3,801 dentists and dental surgeons, 
43,579 nurses, 57,277 other health personnel, and 4,506 phar- 
macists. 

Although by the 1980s about 99 percent of the population par- 
ticipated in the social insurance system and could receive free med- 
ical services and hospital care, much private practice was allowed. 
In 1984 more than 3,600 health service doctors engaged in private 
practice, treating private patients during their free time. Many of 
them had very lucrative private practices. Many persons in upper- 
income groups, who could afford the high price of private medical 
care, chose to use the services of a private physician rather than 
one assigned to them by the health service. Public opinion consi- 
dered the care given by private physicians to be of higher quality 
than that provided by the health service. 

In the 1980s, the public engaged in much frank and apparently 
uncensored discussion about serious shortcomings in health care. 
Complaints concerned the aging of hospital facilities, the disrepair 
of their equipment, the shortages of basic medications, and the in- 
adequate training of low-paid medical personnel. Western analysts 
estimated that Hungary spent only 3 . 3 percent of its gross national 
product specifically on health service (the 6 percent figure listed 
in most statistical data actually included some social services). This 
percentage was the lowest of any East European country except 
Romania (in comparison, the United States spent 11 percent of 
GNP on health care). Critics judged the health system to be sub- 
standard, unreliable, and increasingly tainted by the practice of 
offering gratuities to medical personnel to ensure quality care. They 
warned that the achievements of past years were jeopardized by 
the current neglect. 

Certain trends in the general health of the population indeed 
gave health authorities reason for concern in the 1980s. Life ex- 
pectancy at birth was the lowest among thirty-three developed coun- 
tries rated by the World Health Organization. In 1986 the infant 
mortality rate was 19 per 1,000 live births (see table 4, Appen- 
dix). This figure showed an improvement over the 1970 rate of 



100 



The Society and Its Environment 



35.9 per 1,000. However, the infant mortality rate remained among 
the highest for industrialized countries with developed health sys- 
tems. In 1985, according to Minister of Defense Ferenc Karpati, 
10 to 11 percent of young males were unfit for military service, 
and another 4 to 5 percent could not undergo strenuous physical 
training. Among conscripts accepted for service, 3 to 4 percent were 
discharged before the end of their training for health reasons, 
primarily because of physical or nervous disorders. 

Health authorities had other special concerns less directly related 
to the health care system. One such problem was the country's high 
suicide rate. In the mid-1980s, the suicide rate was 44 per 100,000 
inhabitants, the highest suicide rate in the world. (The country with 
the second highest suicide rate, Austria, reported 26.9 suicides per 
100,000 inhabitants in 1984.) The very high suicide rate had a 
lengthy history, confirmed by statistics dating back more than a 
century. Since the late 1960s, however, the rate had risen notice- 
ably. Hungarian experts cited as factors contributing to the trou- 
bling situation alcoholism, mental illness, the growing number of 
elderly people, the disorienting effect of urban life, stress, and the 
weakening of family and community bonds as a result of rapid 
modernization. The high suicide rate among people over age sixty 
was thought to result from the economic stagnation and inflation 
of the 1980s, which made it difficult for people to subsist on small 
pensions. 

In the mid-1980s, the authorities were also discussing the grow- 
ing incidence of substance abuse. The incidence of alcoholism had 
increased during the previous generation, and a high percentage 
of suicide victims were alcoholics. As of 1986, consumption of 
alcohol per person per year was 11.7 liters; consumption of hard 
liquor (4.8 liters per person) was the second highest in the world. 
Authorities had increased the price of hard liquor five times be- 
tween 1973 and 1986, but despite these measures, excessive alco- 
hol consumption remained a problem. Although less salient than 
alcoholism, drug addiction was also becoming a source of some 
concern and was discussed in the press. Acquired immune defi- 
ciency syndrome (AIDS), a serious health threat associated with 
drug use in many countries, was not a major health concern in 
Hungary in the late 1980s. According to government statistics 
released in early 1989, the first AIDS patient entered a Budapest 
hospital in 1985. During the following four years, the country had 
twelve AIDS-related deaths. 

In the 1980s, another source of anxiety for both health authori- 
ties and the general public was the downward trend projected for 
the country's population (see Structure, this ch.). As early as 1973, 



101 



Hungary: A Country Study 



concern about the slowdown in population growth had led to the 
introduction of a comprehensive population policy. Supplemental 
provisions had broadened the coverage in subsequent years. The 
policy mandated generous pregnancy and maternity allowances. 
Working mothers enjoyed a twenty- week maternity leave with full 
pay. After the twenty weeks had elapsed, the mother could receive 
an allowance to enable her to raise the child at home until it reached 
the age of three: the amount of the allowance varied according to 
the number of children and amounted to about 25 to 40 percent 
of national average earnings per month. In addition, working 
mothers had access to unpaid days off (prorated according to the 
number and ages of the children involved) or other benefits to enable 
them to take care of a sick child. Additional ongoing family allow- 
ances were available for families with two or more children. In spite 
of this assistance, child rearing was a large expense to families. The 
various forms of assistance, while clearly beneficial to young fam- 
ilies, actually amounted to only 15 to 20 percent of child-rearing 
costs. 

Welfare 

In the late 1980s, the country's pension system covered about 
85 percent of the population falling within pensionable ages. Male 
workers could qualify for pensions at the age of sixty, female work- 
ers at the age of fifty-five. The number of pensioners had increased 
rapidly since the end of World War II as people lived longer and 
as pension coverage expanded to include additional segments of 
the population. In the early 1950s, the country had had only 12 
to 13 pensioners for every 100 active workers. In the late 1980s, 
however, the country had 50 pensioners for every 100 active work- 
ers. This trend placed a heavy burden on the government, the main 
source of pension funds. 

The amount of a person's pension depended upon earnings and 
number of years of employment. In 1989 the minimum monthly 
pension was 3.340 forints (about US$54). Yearly cost-of-living in- 
creases had failed to keep up with inflation. In 1979 the govern- 
ment introduced major pension increases for the lowest-paid 
pensioners in an effort to improve the situation. The most vulner- 
able pensioners tended to be women, whose pensions averaged 25 
percent less than men's pensions. More women had small pensions 
than men because women generally had worked fewer years. and 
earned lower salaries. About 20 percent of all pensioners, or about 
400.000 persons, worked to bring in additional income, usually 
undertaking part-time or seasonal work. In the 1980s, pension- 
ers constituted a significant segment of the country's poor. The 



102 



Private home in Mezokdvesd 
Courtesy Sam and Sarah Stulberg 

unfortunate circumstances of many elderly citizens and the need 
to reform the pension system were the subjects of considerable press 
commentary. 

Housing 

For many years, the housing conditions in Hungary were only 
a peripheral concern of the communist regime. The housing that 
existed before World War II had many shortcomings. Most pre- 
war apartments had only one room and a kitchen area, and these 
facilities, already overcrowded and expensive, had been heavily 
damaged during the war. In 1949 the country had 265 inhabitants 
for every 100 rooms. After 1949 the government confiscated exist- 
ing housing and redistributed it. The government chose not to invest 
heavily in housing, although many buildings were reconstructed. 
The new regime affirmed the right of all inhabitants to decent hous- 
ing, prohibited evictions, and regulated rents, but these measures 
did not accelerate construction. During the early years of communist 
rule, economic planning gave priority to the building of new plants 
and other industrial installations rather than to new housing. Thus, 
construction of housing did not keep pace with urban industrial 
expansion, which had attracted large numbers of workers from 
the villages into the cities. Not until the Fourth Five- Year Plan 
(1971-75) did the housing problem receive serious, sustained 



103 



Hungary: A Country Study 

attention. Progress then became more rapid, and the government 
experimented with various approaches to the problem. Because of 
budget constraints, the government abandoned its goal of provid- 
ing low-rent apartments for all citizens. Instead, it urged people 
to invest in their own housing and made available low-interest loans 
for the construction of cooperative apartment buildings and pri- 
vate homes. This policy spurred construction and helped to reduce 
the overall housing shortage. However, most new housing units 
were built for the higher-income groups. Families with lower in- 
comes continued to rely on state-financed or industry-financed low- 
rent housing, which usually had long waiting lists of prospective 
tenants. 

In the 1980s, housing remained a major concern for families at 
all status and income levels. As the government's direct role in 
providing housing diminished, many families tried to use any sur- 
plus income they had to acquire modern, spacious, well-equipped 
dwellings. For private individuals wishing to build dwellings, the 
most important resources were family and friends (for labor) and 
loans (usually sponsored by the government at 3 percent interest 
for up to 70 percent of the total construction cost and repayable 
over a maximum of thirty-five years). As of 1983, only about 22.3 
percent of the country's dwellings were state owned, down from 
33.9 percent in the first half of the 1970s. The remaining units were 
privately owned. In 1986 approximately 69,430 dwellings were con- 
structed, 7,620 by the state and 61 ,800 by private individuals (the 
vast majority of whom received some state funding). However, 
despite significant gains, housing was still not sufficient for the coun- 
try's needs. 

Dissent and Freedom of Expression 

In the late 1980s, numerous signs pointed to an enlivening of 
cultural and intellectual life. The bounds of permissible expression 
became wider as authorities eased restrictions on artistic, intellec- 
tual, and political expression. 

Until the mid-1980s, outright opposition to the regime and its 
social, political, and cultural policies was undertaken primarily by 
intellectuals. However, the relative success of the economy after 
1968 made it difficult for dissidents to attract broad followings. The 
working class was politically quiescent, being the beneficiary of full 
employment and generous welfare provisions. The government's 
response to its critics was to acknowledge their existence but also 
to stress their small numbers and irrelevance. Few official puni- 
tive actions such as arrests or trials took place, but the authorities 
did use low-level police harassment, surveillance, and other forms 



104 



The Society and Its Environment 



of indirect pressure. Prominent individuals found their movements 
watched and occasionally hindered by the police. Less eminent peo- 
ple sometimes received threats to their jobs and careers. Authori- 
ties denied some individuals permission to travel abroad or, at the 
other extreme, urged them to emigrate. The police conducted oc- 
casional house searches and levied fines for illicit printing or dis- 
tribution of unauthorized publications (samizdat). Most dissidents 
faced only sporadic repression but also minimal public response. 

In addition to the continuing efforts of dissident intellectuals, 
several groups of protesters pursued specific social or political goals 
in the early 1980s. The law did not recognize conscientious objec- 
tion and prescribed up to five years' imprisonment as punishment 
for refusal to perform military service. Beginning in 1977, however, 
members of certain small Christian sects, such as the Nazarenes, 
Jehovah's Witnesses, and Seventh-Day Adventists, were allowed 
to perform unarmed military service (see Conscientious Objection, 
ch. 5). This privilege was not available to Roman Catholics and 
members of larger Protestant denominations, whose church hier- 
archies had a history of supporting the establishment. As of 1986, 
Amnesty International reported that as many as 150 Hungarian 
conscientious objectors were in prison, most of them Jehovah's Wit- 
nesses who refused to perform even the alternative military ser- 
vice available to them. In the early 1980s, an independent peace 
movement of significant proportions developed (called Peace Group 
for Dialogue, or Dialogus), made up primarily of university stu- 
dents and recent university graduates. Facing official hostility and 
unable to initiate a dialogue with the authorities, the organization 
disbanded in 1983. Its members and other persons formed other 
smaller groups and engaged in small-scale independent activity. 
Under pressure from the authorities, some of these small groups 
eventually merged with the officially recognized National Peace 
Council. 

In the mid-1980s, the ecology, or "Green," movement was the 
largest independent movement. Its supporters opposed the joint 
project of the Czechoslovak and Hungarian governments, financed 
partially by the Austrian government, to build the Gabcikovo- 
Nagymaros Dam at the border where the Danube River crosses 
from Czechoslovakia to Hungary (see Relations with Other Com- 
munist Neighbors, ch. 4). Demonstrations attracted as many as 
20,000 people. Several smaller environmental organizations also 
engaged in small-scale public awareness campaigns. The environ- 
mental groups often sought to maintain distance between them- 
selves and dissident political groups, both to legitimize their 
viewpoint vis-a-vis the government and to attract wider support. 



105 



Hungary: A Country Study 



Environmentalists were very cautious in their response to the 1986 
accident at the Chernobyl' nuclear power plant in the Soviet Union, 
which was a politically sensitive issue. The government criticized 
independent environmental groups, accusing activists of pander- 
ing to nationalist sentiments and permitting foreign agitators to 
intrude. The official press generally ignored the activities and state- 
ments of the environmentalists. Occasionally, the police harassed 
their leaders. Nevertheless, environmental issues appeared to be 
of great interest to the public, many of whom signed protest peti- 
tions and attended meetings in significant numbers. 

In the late 1980s, opportunities for self-expression expanded 
greatly and abruptly. The party itself was planning to establish a 
limited multiparty political system in the country (see Amendments 
of 1972, ch. 4). Increasingly, party members acknowledged pub- 
lic criticism of conditions in society and responded to them. And 
in the late 1980s, for the first time in decades, the authorities oc- 
casionally permitted demonstrations calling for changes in policy. 
However, signals sent by the government to the public were some- 
what mixed; occasional arrests and mistreatment of dissidents con- 
tinued, and police broke up some demonstrations. In the late 1980s, 
individuals began testing the limits of the government's less re- 
strictive approach. The system of informal self-censorship, which 
had operated since the 1960s, appeared to be foundering (see Mass 
Media, ch. 4). Historians called for archival sources on the na- 
tion's recent history to be opened and freely examined by impar- 
tial scholars. A variety of independent publishers and periodicals 
appeared, dealing with sensitive issues or publishing the works of 
authors previously considered taboo. The official press and occa- 
sionally even television journalism were becoming more outspoken 
on virtually all issues, possibly in response to growing competi- 
tion for the public's attention. 

As freedom of association became more extensive (a more per- 
missive law was officially adopted in 1989), a number of groups 
emerged with interests spanning the entire range of social and po- 
litical life. The focus of many new associations revealed a growing 
popular interest in public affairs. The groups ranged in outlook 
from the neo-Stalinist Ferenc Munnich Society, founded in 1988, 
to the "Openness Club," also founded in 1988, which sought to 
promote complete freedom of the press, television, and radio. 

Some groups with definite political leanings hoped eventually 
to function as viable political parties. Others sought merely to 
represent and publicize the viewpoints of members. Several of the 
latter received particular attention throughout the country. In Sep- 
tember 1987, a group of about 150 intellectuals, including some 



106 



The Society and Its Environment 



party members, formed the Hungarian Democratic Forum to spon- 
sor public debates on social and political policy. At first the regime 
seemed to welcome the Forum, apparently hoping to reap the sup- 
port of previously disaffected intellectuals. However, the Forum's 
status later became less clear, as some of the participating party 
members were expelled from the party. In 1988 a group of stu- 
dents established a new national organization called the Federa- 
tion of Young Democrats. A politically radical group, it aimed to 
establish a democratic Hungary, but its leaders denied any plans 
to form a political party. In 1989, together with five other organi- 
zations, the Hungarian Democratic Forum and the Federation of 
Young Democrats formed what became known as the Opposition 
Roundtable to discuss a variety of social and political policy options. 

In the late 1980s, more than at any time in the previous four 
decades, the Hungarian people lacked a consensus on the proper 
social goals of the country. Some observers, both within the coun- 
try and abroad, feared that if economic conditions worsened as 
predicted, latent conflicts among social groups would destabilize 
the country, especially in the absence of strong state and party in- 
fluence, which was no longer considered legitimate in the eyes of 
the populace. However, other observers stressed the opportunities 
for the emergence of new, fresh ideas and the vigorous, healthy 
debates that were occurring throughout Hungarian society. The 
latter assessment gave genuine grounds for optimism. 

* * * 

For a retrospective view of aspects of society's development, 
Zsuzsa Ferge's A Society in the Making is helpful. Both Hungarian 
and Western ethnographers have shown special interest in Hun- 
garian rural life and its modern evolution. Two valuable studies 
are Edit Fel's and Tamas Hofer's Proper Peasants and Peter D. Bell's 
Peasants in Socialist Transition. Hungarian Ethnography and Folklore by 
Hungarian ethnographers Ivan Balassa and Gyula Ortutay con- 
tains a wealth of detail as well as illustrations of traditional Hun- 
garian folkways. For the current urban perspective, Peter A. 
Toma's Socialist Authority provides a readable, somewhat journalistic 
overview. The Hungarian government's Central Statistical Office 
publishes statistical yearbooks in English that incorporate much 
information concerning past and present social structure. The For- 
eign Broadcast Information Service's Daily Report: East Europe offers 
current reporting of major social developments as depicted in the 
Hungarian media. The reports published by Radio Free Europe 
contain valuable information and analyses as well. (For further in- 
formation and complete citations, see Bibliography.) 



107 



Chapter 3. The Economy 



Large kitchen for farm workers' meals, 1924 



DESPITE WAR, DEPRESSION, revolution, foreign occupation, 
and periods of near chaos, Hungary's economy has advanced in 
the twentieth century from a near-feudal state to a middle-level 
stage of industrial development. The economic system has under- 
gone dramatic change since 1968, evolving from a Soviet-type 
"command" economy, in which government planners in Budapest 
dictated much of the country's economic behavior, into a hybrid 
that combined social ownership of the means of production with 
a stock exchange, central planning with aspects of a free market, 
and government intervention with a measure of enterprise auton- 
omy and some private enterprise. After Hungary's failed popular 
revolution against communist rule in 1956, the government opted 
to foster domestic tranquility and legitimize control by the Hun- 
garian Socialist Workers' Party by steadily improving the Hun- 
garians' standard of living through economic growth. 

For several reasons, the Hungarian economy can grow only if 
its factories and farms become more efficient and competitive. First, 
except for excess workers in existing enterprises, Hungary no longer 
has an untapped labor pool, such as the one that existed after World 
War II in the female and peasant populations. Second, the coun- 
try has a paucity of natural resources, and imports of raw mate- 
rials have become more costly for Hungary on both Western and 
Council for Mutual Economic Assistance markets. Third, Hun- 
gary can pay for imports of raw materials and efficiency-improving 
Western technology only by exporting goods whose quality and 
price are competitive in the world market. 

Since 1968 the government has launched two rounds of economic 
reform, seeking to boost efficiency and competitiveness. The first 
was the New Economic Mechanism, introduced in 1968, in which 
the government abolished universal compulsory planning, grant- 
ed enterprises greater autonomy, and unleashed some market forces. 
The program stalled within four years, but a burgeoning balance 
of trade deficit, slumping performance, deteriorating terms of trade, 
and other problems prompted the leadership to start the reform 
process anew in the late 1970s. Since then the government has 
streamlined its ministries, dismantled some huge enterprises and 
trusts, stimulated the growth of small and private firms, implement- 
ed a competitive pricing system, decentralized foreign trade, created 
small stock and bond markets, enacted a bankruptcy law, carried 



111 



Hungary: A Country Study 

out banking reform, and levied value-added (see Glossary) and 
personal-income taxes. 

In the late 1980s, a burdensome foreign debt, inefficient enter- 
prises, raw-material supply problems, and stiffer competition in the 
world market were just a few of the problems facing the economy. 
The country's leaders had to improve Hungary's convertible- 
currency trade balance significantly in order to import the tech- 
nology and raw materials necessary for further growth. At the same 
time, they had to maintain or improve domestic living standards 
and hold down unemployment and domestic inflation. The con- 
junction of Soviet leader Mikhail S. Gorbachev's program of re- 
structuring in the Soviet Union and Janos Kadar's replacement 
as party general secretary by Karoly Grosz in Hungary greatly en- 
hanced the chances that the government would try to achieve further 
economic progress by implementing even more dramatic reforms. 

Although Western observers agreed that Hungary had the most 
accurate and open reporting of economic statistics in the communist 
world, they warned against accepting those data at face value. 
Economists in communist and noncommunist countries used differ- 
ent statistical concepts and procedures that produced differing 
images of Hungary's economic system. Hungarian and foreign 
analysts also complained that political expedience had sometimes 
tainted Hungary's official statistics. 

Resource Base 

Geologically, Hungary is composed primarily of young sedimen- 
tary rock that is generally poor in minerals and other raw mate- 
rials except bauxite, soft coal, and small deposits of uranium, natural 
gas, oil, iron ore, manganese, and copper. However, Hungary has 
large tracts of fertile land, a favorable climate, and some forests. 
The country's general lack of raw materials has necessitated for- 
eign trade, a concern that has dominated the economic policies of 
Hungarian governments since 1918, when the country lost much 
of the territory it held prior to World War I (see Trianon Hun- 
gary, ch. 1). Raw materials, semifinished products, spare parts, 
fuels, and electricity accounted for 64.2 percent of imports in 1986 
and cost 25.9 percent of Hungary's gross domestic product (GDP — 
see Glossary). The Soviet Union was Hungary's principal supplier 
of raw materials (see Foreign Trade, this ch.). 

Energy Resources 

In the late 1980s, Hungary's coal deposits totaled about 4.5 bil- 
lion tons and included hard coal (about 15 percent of the total), 
brown coal (30 percent), and lignite (55 percent). Hungarian coal 



112 



The Economy 



generally has a low energy content and lies at great depths in thin 
seams, making mining difficult and costly. Deep mines in the Mecsek 
Mountains near Pecs and Komlo yield dusty hard coal and coal suita- 
ble for coking. Thick layers of higher-quality brown coal lie 200 to 
300 meters beneath Tatabanya and Dorog, while lower-quality 
brown coal lies under the Carpathian foothills near Miskolc and in 
the central Danube Plain. The Varpalota Basin in Veszprem County 
and the southern slopes of the Matra Mountains yield lignite. Hun- 
garian experts predict that the country's coal reserves will last about 
400 years at the production levels attained in the late 1980s. 

Hungary's natural-gas and oil deposits are far smaller than its 
coal reserves. The country's largest natural-gas deposits are located 
near Szeged, Hajduszoboszlo, and Miskolc. Geologists hoped to 
discover additional natural- gas deposits but predicted that natural- 
gas reserves would run dry in fifteen to twenty years. Small crude- 
oil deposits lie beneath Szeged, Zala County, and other areas. The 
Zala crude is highly viscous and difficult to transport. Wells at 
Lispeszentadorjam, Lovaszi, and other sites yield high-quality oil, 
but in the late 1980s the deposits were almost exhausted. In the late 
1970s, drillers struck oil in the mid-Danube-Tisza region (the cen- 
tral part of the country) and near Sarkeresztur, Endrod, and Ulles. 
However, geologists anticipated no new major oil discoveries and 
expected the wells to run dry by the year 2000. 

In the 1950s, Hungary began mining uranium near Pecs with 
Soviet assistance. In the late 1980s, estimates of the actual size of 
the country's uranium deposits were unavailable, but official sources 
indicated that Hungary had uranium reserves sufficient to supply 
its domestic needs until about the year 2020. In the mid-1980s, 
the Soviet Union guaranteed Hungary's future nuclear-fuel needs. 

Mineral Resources 

The Bakony and Vertes mountains contain 10 to 12 percent of 
the world's known bauxite reserves and deposits of manganese ore, 
the only alloy necessary for steel production found in Hungary. 
The only iron-ore mine, located at Rudabanya, produces ankerite 
and siderite that contain only 24 to 27 percent iron and require 
lime before smelting. In the late 1980s, the country's limestone 
and dolomite reserves satisfied the needs of its pig-iron industry. 
Copper mines at Recsk remained undeveloped in 1987 because of 
lack of financing and because of copper's low price on world com- 
modity markets. 

Land, Climate, and Forests 

Arable land, pastures, meadows, vineyards, and gardens occupy 
70 percent of the total land area. Hungary has large tracts of fertile 



113 



Hungary: A Country Study 

black soil, especially in the Great Plain region; although the cli- 
mate can be harsh, it is favorable for agriculture (see Climate, 
ch. 2). Concentrated in mountainous areas, the forests occupy about 
1 . 5 million hectares and contain mostly deciduous trees of little 
value except for holding moisture. The government launched an 
extensive reforestation effort after World War II, but in the late 
1980s domestic timber still supplied only 10 percent of the coun- 
try's needs. 

Environmental Problems 

Rapid industrialization and the priority of plan fulfillment over 
environmental concerns have produced serious air and water pol- 
lution problems in Hungary. In the late 1980s, about 38 percent 
of Hungary's population lived in regions where air pollution ex- 
ceeded international standards. Electric plants burning high- sulfur 
coal and automobiles emitted most of the pollutants that fouled 
Hungary's air. The country's sulfur-dioxide emissions in 1984 to- 
taled 1.8 million tons, an average of 17.6 kilograms per hectare. 
Prevailing winds from the west and southwest carried 70 percent 
of Hungary's sulfur-dioxide emissions into neighboring countries, 
but acid rain had damaged 25 to 30 percent of the country's forests. 
Government efforts had succeeded in reducing dust pollution. 

Pollutants also fouled the rivers and ground water. The Tisza, 
Danube, Szamos, Sajo, and Zagyva were Hungary's most polluted 
rivers, and the water supplies of 773 towns and villages were not 
fit for human consumption. In 1970 Hungary emitted 1.5 million 
cubic meters of polluted water per day. Industrial waste from chem- 
ical, rubber, iron, paper, and food-processing industries accounted 
for 70 percent of the effluent, of which only 27 percent was treated. 
Only 46 percent of Hungary's population had an adequate sew- 
age system. 

In the 1980s, Hungary annually produced 5 million tons of 
hazardous waste, and it reportedly imported hazardous waste from 
Austria, Switzerland, and the Federal Republic of Germany (West 
Germany) in return for hard currency. After three years of public 
protest, in the late 1980s Hungary began constructing an inciner- 
ator in Dorog capable of burning about 25,000 tons of hazardous 
waste per year. Hungary operated a nuclear- waste dump between 
the villages of Kisnemedi and Piispokszilagy, but precise informa- 
tion on the disposal of radioactive waste from the country's nuclear 
power plant was unavailable. 

Hungary signed the United Nations Convention on Long-Range 
Transboundary Air Pollution in 1979 and the Helsinki protocol 



114 



The Economy 



on sulfur-dioxide emissions in 1985. In 1987 and 1988, the govern- 
ment passed new pollution regulations and obtained loans from 
the World Bank (see Glossary) to improve pollution control. Hun- 
gary had antipollution agreements with Czechoslovakia and Aus- 
tria but had no such agreement with Romania and complained 
about Romania's chronic discharge of phenol, oil, and other pol- 
lutants into the Tisza and smaller rivers. 

Labor Force 

In the late 1980s, active earners made up a large percentage of 
the working-age population, and many Hungarians supplemented 
their income by working outside jobs, tilling household plots, or 
operating private businesses. Unfortunately, many enterprises used 
labor inefficiently, and the country suffered from underemploy- 
ment and relatively low labor productivity. The government had 
enacted measures aimed at forcing enterprises to operate more ef- 
ficiently. Regrettably, these measures threatened the elimination 
of many jobs and signaled a significant ideological departure from 
communism's commitment to full employment. Fear of unemploy- 
ment influenced government decisions to allow the private sector 
to grow and to create jobs for laid-off workers. Despite the govern- 
ment's concern, observers expected overall unemployment to re- 
main low by Western standards. 

Work Force 

In 1987 about 6.1 million of Hungary's 10.6 million people were 
of working age, and 4.9 million were active earners. The number 
of active earners was expected to remain between 4.8 and 5.1 mil- 
lion in the 1990s. The state sector employed about 3.5 million per- 
sons (70.5 percent of the country's active earners) in 1986; the 
cooperative sector, approximately 1.2 million (23.8 percent); and 
the private sector, about 266,000 (5.4 percent). According to for- 
eign observers, official statistics underestimated the size of the pri- 
vate sector because they included only persons who reported their 
private activity as their primary occupation. In the late 1980s, ap- 
proximately 75 percent of Hungary's families earned extra incomes 
working " sideline activities" to supplement the wages and benefits 
that family members earned in the state and cooperative sectors. 
These activities, which were mostly agricultural, generated produc- 
tive man-hours equal to about 20 percent of the man-hours worked 
each year in the socialist sector (the state and cooperative sectors) . 
While sideline activities contributed to family incomes and the na- 
tion's productivity, they also deprived the socialist sector of the 



115 



Hungary: A Country Study 

energy and attention that workers would otherwise direct to their 
primary jobs. 

In 1987 workers in industry numbered just over 1.5 million, or 
31.2 percent of the active earners, including 57,600 in the private 
sector (see table 5, Appendix). When rapid industrialization began 
in 1949, only 19.4 percent of the labor force worked in industry. 
Hungary had about 19.3 percent of its labor force or 890,000 ac- 
tive earners working in the agricultural sector in 1987, including 
about 846,100 in the socialist sector and 43,900 in the private sec- 
tor. The number of persons actually engaged in private agricul- 
ture was much higher, however, because government statistics 
counted collective- and state-farm members who worked house- 
hold plots only as members of the socialist sector. The number of 
workers in the agricultural sector has steadily declined since the 
war. In 1949 about 53.8 percent of the labor force worked in agricul- 
ture; this figure dropped to 24.4 percent in 1970 and to 19 percent 
in 1980, but it rebounded slightiy to 19.3 in 1987 as agricultural 
enterprises began employing more workers in nonagricultural ac- 
tivities. The service sector accounted for 21 .3 percent of the active 
work force in 1986; commerce, 10.5 percent; transportation and 
telecommunications employed 8.3 percent; and construction, 7 
percent. 

Underemployment and Unemployment 

After World War II, Hungary suffered from chronic, widespread 
underemployment. Until the late 1980s, the leadership stubbornly 
clung to the principle of full employment, and employment rolls 
swelled because, as a consequence of low wages, it was more cost 
effective to employ human labor than install labor-saving equip- 
ment or implement other efficiency measures. In addition, an en- 
terprise tax based on average wages encouraged managers to pad 
their payrolls with low-paid, redundant employees who worked at 
or near full capacity only during the closing weeks of a plan period 
when pressure to meet targets was most intense. Underemploy- 
ment combined with other factors to make the country's labor 
productivity only 40 to 50 percent of that in Western countries. 
In the late 1980s, the government shelved the principle of full em- 
ployment and enacted measures, including new bankruptcy and 
tax laws, to induce enterprises to use labor and other resources more 
efficiendy (see Economic Regulators, this ch.). Vigorous implemen- 
tation of these measures will entail layoffs, retraining, and early 
retirement for many workers. 

Hungary was the first member of the Council for Mutual Eco- 
nomic Assistance (Comecon — see Glossary) to acknowledge the 



116 



The Economy 



existence of unemployment. Marxist-Leninist ideology has always 
considered socialism and unemployment incompatible, and until 
1987 even the word unemployment was taboo in Hungary. The ideo- 
logical implications of this policy shift outweighed the scale of the 
potential layoffs. The government reported that 30,000 to 40,000 
people were unemployed in late 1987, and government officials have 
estimated that another 100,000 to 150,000 workers might be laid 
off while Hungary implemented its economic reform. Compared 
with Western countries, however, Hungary's unemployment prob- 
lem was relatively small: a 4 percent unemployment rate is gener- 
ally considered full employment in a free-market economy; in 
Hungary this percentage would amount to about 240,000 people. 

In 1987 Hungary became the first communist state to establish 
public works programs to provide jobs for the unemployed. In 1988 
it created an unemployment relief fund with the capacity to benefit 
25,000 people. Nevertheless, critics argued that the government 
did not allot sufficient funds to these programs to deal with projected 
layoffs. 

Labor Turnover 

Before 1968 the labor force was generally tied to the workplace. 
The government restricted job changes and prohibited moving to 
a new city without permission. In the 1980s, however, the annual 
labor turnover rate averaged about 23 percent, or about 1 million 
job changes each year, mostly in low-paying, seasonal, and un- 
skilled positions. Although the government had lifted legal restric- 
tions, relocation to another city was unusual because Hungary had 
a housing shortage. 

Women in the Work Force and Foreign Workers 

Women joined the work force in great numbers after World War 
II and contributed significantly to the government's industrializa- 
tion drive in the 1950s and 1960s. Families supported the entry 
of women into the work force because they could not survive on 
a single income or they desired a higher living standard. In 1949 
about 29.2 percent of active earners were women; by 1987 they 
accounted for 46 percent. Likewise, whereas 34.5 percent of 
working-age women were active earners in 1949, about 75 per- 
cent were active earners by 1987. About 59 percent of Hungary's 
working women were manual workers; the remainder worked in 
white-collar jobs. (About 70 percent of men were manual workers, 
and 30 percent had white-collar jobs.) Women dominated low- 
paying jobs in the textile industry, the service sector, canneries, 



117 



Hungary: A Country Study 

and commerce; in the white-collar area, women dominated in 
education, health, and low-profile office jobs. 

Hungarian enterprises employed about 10,000 foreign workers 
in 1986, including about 3,000 Polish miners, 1,300 Cubans in 
various jobs, and some Vietnamese textile workers. After 1983 Hun- 
garian workers with firm job offers were free to accept employ- 
ment in Western countries for up to five years, but in 1986 only 
a small number of Hungarians were employed abroad. 

Economic System and Control Mechanisms 

In the late 1940s, Hungary's Marxist-Leninist leaders imposed 
a Soviet- style command economy that included rigid central plan- 
ning, agricultural collectivization, and rapid industrialization (see 
Postwar Hungary, ch. 1). Faced with the need to improve efficiency 
in the late 1960s, however, the government undertook economic 
reforms and in 1968 introduced the New Economic Mechanism 
(NEM), which eliminated compulsory plan directives, introduced 
market mechanisms, allowed many enterprises a measure of au- 
tonomy, and legalized a narrow range of private economic activ- 
ity. The reform stalled between 1972 and 1978, but trade imbalances 
and other problems prompted the government in 1979 to begin 
implementing a second wave of reforms that included ministerial 
and industrial restructuring. These reforms to a great degree 
differentiated the Hungarian economy from a traditional command 
economy. The Hungarian Socialist Workers' Party (HSWP), 
however, has retained its monopoly of political power, and a cen- 
tral plan containing broad goals still existed in 1989. After Kadar's 
resignation as general secretary in May 1988, Hungary entered 
a new era that may see more energetic implementation of reforms 
already on the books and the enactment of even more radical re- 
form measures. 

Role of Party and Government Bodies 

As of mid- 1989, the HSWP was the dominant political institu- 
tion in the government and the ultimate authority on all political, 
economic, and social issues (see Hungarian Socialist Workers' 
Party, ch. 4). The party's leading organs passed resolutions that 
functioned as basic guidelines for government bodies making eco- 
nomic decisions, and party leaders also exercised formidable in- 
formal influence. Primary authority lay with the Politburo and the 
Secretariat (particularly the latter' s committee for economic and 
social welfare policy, the working group for economics, and the 
department for economic and social welfare policy). In the 1980s, 
the party assumed a lower profile in economic decision making than 



118 



The Economy 



it had before the reform, and it consulted more with ministers, enter- 
prises, and other government and economic organizations. 

The Council of Ministers was the government's highest admin- 
istrative decision-making body. Its State Planning Committee 
concerned itself with long-term economic issues. The council's Eco- 
nomic Committee oversaw the economy's day-to-day operation (see 
State Apparatus, ch. 4). 

The government consolidated the ministerial structure in the late 
1970s and 1980s in order to reduce the ministries' influence on 
managers of enterprises. In 1989 four branch ministries — industry, 
agriculture and food, construction, and communications — set pol- 
icy, assisted in allocating resources (especially investments), promoted 
development, and ensured achievement of export targets. Hungary's 
functional ministries were the Ministry of Finance and the Minis- 
try of Trade. The Ministry of Finance supervised the banking sys- 
tem and worked out many of the economic regulators that guided 
the economy. The Ministry of Trade developed and implemented 
foreign and domestic trade policy, granted export and import licenses 
and certain subsidies, and controlled the balance of payments. 

The National Planning Authority and the National Price Office 
acted much like functional ministries. As with traditional centrally 
planned economies, the National Planning Authority was one of 
the most powerful economic organs in the government. It partici- 
pated in almost all of the central government's economic decision 
making, and its chairman presided over the State Planning Com- 
mittee. After the NEM was instituted, however, the planning 
authority focused primarily on medium- and long-term planning. 
Prices were supposed to reflect "justified" costs, and enterprises had 
to report price increases to the National Price Office, which could 
intervene formally or informally if it deemed a price increase un- 
justified. With the Council of Ministers' approval, the National Price 
Office could issue administrative commands to enterprises in case 
of actual or possible economic disruptions. However, the National 
Price Office usually used persuasion or adjusted one of the economic 
regulators to implement its decisions. 

In the late 1980s, to oversee economic policy the National As- 
sembly had committees on planning and finance, industry, agricul- 
ture, and commerce (see National Assembly, ch. 4). The assembly's 
role in economic policy making was growing, but it was still far 
less important than its Western counterparts. 

Ownership 

The means of production consist of all the material factors used 
to produce goods and include land, raw materials, and capital. In 



119 



Hungary: A Country Study 



a traditional centrally planned economy, the state owns all the sig- 
nificant means of production outside the agricultural sector. The 
ruling party and the government planning bureaucracy exercise 
the functions of ownership and ration the means of production. 
In the agricultural sector, state, cooperative, and private forms of 
ownership coexist, but the state closely supervises and controls all 
key aspects of production. 

In Hungary state ownership of the means of production still 
predominated in the late 1980s, although the government had 
broadened the scope of private and foreign ownership. The state 
has owned more than 90 percent of Hungary's agricultural land 
since its second collectivization campaign ended in the early 1960s. 
In industry, economic reformers wanted the state to delegate owner- 
ship functions to enterprises in the socialist sector or to indepen- 
dent holding companies whose only function would be to exercise 
ownership rights. (These companies would operate much the same 
way that incorporated companies in capitalist economies operate.) 
Hungary had abolished the system of formal central allocation of 
resources for all but a few goods, and enterprises generally had 
to purchase labor, raw materials, and other inputs to production 
and sell output on their own. The government began allowing Hun- 
garian enterprises to form joint ventures with foreign firms in 1972. 
Subsequent laws made joint ventures even more attractive for for- 
eign investors, and in some instances foreign firms could take more 
than a 50 percent stake. 

Planning 

Under capitalism the market guides most economic activity. In 
a traditional command economy, however, a central planning board 
sits atop a hierarchy of ministries, branches, and enterprises and 
attempts to direct almost all economic activity. The board develops 
a national economic plan after bargaining with ministries, enter- 
prises, and others over production targets and resource allocations. 
The board then presents the plan to the country's highest political 
authorities for approval. The plan spells out, among other things, 
what goods will be produced, who will produce them, how much 
will be produced, and what materials and capital will be available. 
After the plan is approved, the planning board issues directives 
to ministries, enterprises, and other economic institutions. The 
directives, which have the force of law, contain production targets 
expressed in physical units for some items and in value terms for 
others. Although all plan targets are compulsory, enforcement is 
stricter on targets for higher-priority items such as military hard- 
ware and producer goods. 



120 



The Economy 



Under the NEM, which was instituted in 1968, the government 
abolished compulsory plan directives for most enterprises, but left 
its planning institutions intact. In the late 1980s, the plan was consid- 
ered a framework rather than a law binding managers of enterprises, 
and plans often stated targets as ranges. The National Planning 
Authority developed long-, medium-, and short-term plans. Long- 
term plans reflected the leadership's overall economic objectives for 
national income, industrial and agricultural production, investment, 
and other areas. The government used short- and medium-term 
planning to guide the economy toward the long-term objectives. 

In the planning process, the central government provided each 
enterprise with information about forthcoming plan objectives, and 
each enterprise in turn furnished the government with a copy of 
its plan. In developing short- and medium- term plans, the National 
Planning Authority first projected supply and demand using enter- 
prise production plans. If supply and demand estimates failed to 
balance or if enterprise production plans did not comply with 
broader plan goals, the authorities could manipulate any of a num- 
ber of economic regulators in order to induce the enterprises to 
revise their production plans. For example, the management of 
each state and collective farm had to prepare a five-year plan ac- 
cording to instructions from the Ministry of Agriculture and Food. 
The ministry then aggregated the plans of all the farms. If the sum 
of the plan targets indicated that the agricultural sector could not 
achieve national production goals, the central authorities manipu- 
lated prices, credits, subsidies, or other economic regulators to in- 
duce farm managers to alter their plans toward fulfilling those goals. 
The party and government supplemented these economic regula- 
tors with direct intervention to ensure plan fulfillment in such key 
areas as defense and energy production, extractive industries, con- 
struction of key infrastructure projects, and foreign trade. 

Economic Regulators 

Instead of issuing compulsory plan targets, the government ad- 
ministratively adjusted economic regulators to induce enterprises 
and cooperatives to fulfill the regime's macroeconomic plan. The 
key economic regulators were prices, taxes, enterprise-income regu- 
lations, exchange rates, and direct administrative intervention. The 
government did not apply the regulators uniformly throughout the 
economy but changed them according to need. 

Prices 

In a traditional command economy, prices function as political 
instruments rather than as natural market regulators that respond 



121 



Hungary: A Country Study 

to supply and demand. Central authorities set producer and con- 
sumer prices, which bear little relationship to each other and often 
remain fixed for many years. Producer prices are those prices that 
enterprises pay for goods. Planners use producer prices to facili- 
tate target- setting and to determine plan fulfillment. Consumer 
prices for all items except housing, foodstuffs, and other basic 
necessities are set at artificially high levels to avoid open inflation. 
Consumer prices for essential goods are supposed to be set at 
market-clearing levels, but actual retail prices are often lower, caus- 
ing persistent shortages and forced savings. Prices for imports and 
exports are based on current world market prices in trade with the 
West and on an average of past world market prices for trade with 
the Comecon countries. 

In 1968 the NEM gave enterprises more flexibility to set prices 
and permitted market forces to influence prices. Subsequent price 
reforms created a direct link between world market prices and Hun- 
garian producer prices for most items. The government, however, 
could not allow prices to float freely because key enterprises faced 
little domestic or import competition and could dictate the prices 
of essential items in an unrestricted market. Decades of arbitrary 
price, wage, tax, and subsidy policies also have left many imbalances 
in the economy that would cause significant dislocations if the 
authorities arbitrarily introduced a free market in one stroke. 

In 1980 the authorities introduced a so-called "competitive price 
system" for industrial producer prices. The system was designed 
to simulate what domestic prices would be if enterprises faced sig- 
nificant market competition. The government assigned each enter- 
prise to one of three groups according to a series of factors, including 
the amount of competition the enterprise faced in the domestic and 
foreign market. The different groups were subject to progressively 
less restrictive pricing rules; enterprises facing the stiffest compe- 
tition were generally subject to the least restrictive rules. A 1984 
reform gradually loosened administrative restrictions in order to 
permit market forces to guide the pricing decisions of a greater num- 
ber of enterprises. In agriculture, the government set producer 
prices annually according to average production costs and other 
factors, and it used cost-plus pricing for most other sectors. 

The NEM left consumer prices virtually untouched, and by 1976 
the average of consumer prices had fallen below the average of 
producer prices. The authorities subsequently adjusted consumer 
prices in order to manage demand, wean enterprises away from 
reliance on government subsidies, and reestablish a buffer between 
producer and consumer prices. Over the course of the 1980s, the 



122 



The Economy 



government attempted to let market forces influence a growing 
number of consumer prices. 

Wages, Salaries, and Incentives 

In a traditional command economy, the government regulates 
each enterprise's wage fund and fixes wage scales for workers in 
different job classifications. Managers receive bonuses based on 
their ability to fulfill plan targets. The government regulates farm- 
ers' incomes by establishing prices for deliveries to the state; some 
farmers legally supplement their earnings by selling produce grown 
on private plots. 

In the late 1980s, labor income was composed of wages, salaries, 
and profit-sharing payments. In addition to levying taxes, the gov- 
ernment regulated wages and salaries by setting basic pay brack- 
ets depending on skill classifications and working conditions. For 
unskilled job categories, the highest-paid workers made 50 percent 
more than the lowest-paid workers; for skilled categories, the 
highest-paid workers made 100 percent more than the lowest-paid 
workers in the same category. Other regulations governed profit- 
sharing distributions. The government used these income regula- 
tors to counterbalance forces that tended to force incomes up and 
thus create inflationary pressures and widen income differentials. 
These forces resulted from the enterprises' monopoly over the 
domestic market and enterprise managers' insufficient economic 
interest in profitability. Wage increases and profit-sharing payments 
have been linked to enterprise profits since 1968, and in 1985 the 
government introduced a radical reform of wage and income rules 
that abandoned the practice of controlling incomes with a check 
on average wages. 

Taxes 

In a command economy, the state collects taxes and other charges 
from enterprises, collectives, cooperatives, and individuals and 
redistributes the revenue to fund public consumption, new invest- 
ment, and subsidies for enterprises unable to cover costs. In the 
late 1980s, Hungary's tax system was very complex. Few tax rules 
applied uniformly to all enterprises; some tax scales were custom- 
fit for individual enterprises, sometimes even within the same 
branch, and the government often granted one-time tax exemp- 
tions to financially strapped enterprises. In 1988 Hungary became 
the first communist country to introduce value-added and personal- 
income taxes. The government originally intended to use these new 
taxes to supplant capital, accumulation, wage, and local taxes on 
enterprises, but it did not abolish all of the existing taxes. 



123 



Hungary: A Country Study 

The 1988 tax law for the first time required state enterprises, 
private businesses, and individuals to account for all business trans- 
actions. The government introduced the value-added tax in order 
to switch its revenue source from the enterprises to consumers; to 
increase labor expenses in order to improve labor efficiency; to in- 
crease prices and enable the government to reduce state subsidies; 
to raise import, raw-material, and energy prices to encourage their 
efficient utilization; and to enhance incentives for export produc- 
tion. The government levied the personal income tax in order to 
minimize net income differentials in the state, cooperative, and pri- 
vate sectors; to stifle the growth of the underground economy; to 
tap previously unreported private income; and to create a means 
to adjust taxes for inflation. The levying of a personal-income tax 
was also intended to help eliminate other kinds of taxes that im- 
peded productivity. 

Enterprise Income Regulation 

In addition to price and wage regulation and taxation, the Hun- 
garian government controlled enterprise incomes by prescribing 
the means by which enterprises calculated revenues and expenses 
and apportioned earnings. Taxes on inputs and profits were levied 
at several steps in the sequence of computations. In 1985 the 
authorities abolished rules requiring enterprises to allocate after- 
tax profits to various wage and development funds, but in the late 
1980s the government still used tax rules and other devices to in- 
fluence enterprise distribution of after-tax profits. 

Exchange-Rate Controls 

In 1981 Hungary established a unified exchange rate and be- 
came the first Comecon country to permit limited convertibility 
of its currency. At the same time, the Hungarian National Bank 
began adjusting the exchange rate of the forint (for value of the 
forint — see Glossary) on a daily basis against a weighted basket 
of nonconvertible currencies, using a variety of criteria including 
export and domestic producer prices. The exchange rate functioned 
as a domestic price-setting guide that to a certain degree reflected 
world market prices. 

Direct Administrative Intervention 

In the late 1980s, the government reserved the right to inter- 
vene directly in sectors marked by a significant market imbalance 
and when manipulation of economic regulators proved insufficient 
to achieve or restore a state of equilibrium. The government also 
could intervene directly when a Comecon agreement had to be 



124 



The Economy 



fulfilled. Means of direct government intervention included allocat- 
ing resources; adjusting imports, exports, or purchases by producers 
and distributors; forcing enterprises to accept contracts to supply, 
for example, important investment projects, the health care sys- 
tem, state reserves, and other areas; designating distribution chan- 
nels; and prescribing inventory levels. Each year the government 
decided which enterprises were subject to central intervention, and 
a list of these enterprises became a part of the annual plan. In the 
late 1980s, government recourse to central allocation or adminis- 
trative intervention had become an exception to the rule, and when 
such intervention did take place, it was in a number of cases only 
temporary. 

Finance 

In a centrally planned economy, an enterprise has three sources 
of finance: the state budget, the banks, and the enterprise's own 
resources. An enterprise cannot, however, use its after-tax profits 
to increase wages or to undertake new investment without govern- 
ment approval. Credit is necessary to provide enterprises with the 
financial means needed to pay for planned inventories and to finance 
operations during the hiatus between delivery and payment; credit 
also gives the government an additional means of controlling enter- 
prise activity. A single bank performs both central and commer- 
cial banking functions. 

The reforms of the mid- to late 1980s significantly altered Hun- 
gary's financial institutions and practices. A number of new banks 
were created, and the government permitted foreign investors to 
participate in the banking system. The credit system was liberal- 
ized, although decisions to extend credit remained unrelated to past 
economic performance. The government also created a series of 
new investment opportunities for individuals and enterprises. Fi- 
nally, in 1986 Hungary enacted a bankruptcy law. 

Financial Institutions 

The economic reforms of the mid- to late 1980s resulted in a 
restructuring of the country's financial institutions. Up until that 
time the institutions included the Ministry of Finance; the Hun- 
garian National Bank; five major and several smaller commercial 
banks, some with foreign partners; the National Savings Bank; small 
venture-capital institutions; and a nascent insurance industry. 

The Ministry of Finance oversaw the financial and banking sys- 
tem and the insurance industry. The ministry also supervised 
foreign-exchange policy and concluded international financial agree- 
ments through the Hungarian National Bank. 



125 



Hungary: A Country Study 



In 1987 Hungary unveiled a new, two-tier banking system con- 
sisting of banks that were supposed to function as genuine, profit- 
making credit institutions. Before the reform, the Hungarian 
National Bank dominated the banking system, functioning as the 
central bank, the bank of issue, and the main commercial bank. 
All banks acted as agents of the state, and their lending decisions 
were based not on profitability but on government guidelines geared 
toward implementing the economic five-year plan. 

The 1987 reform stripped the Hungarian National Bank of its 
commercial-banking function, but it remained the country's bank 
of issue and its central bank. In its role as the bank of issue, the 
Hungarian National Bank established the national payment and 
accounting system, promulgated rules on money circulation, coor- 
dinated Hungary's relations with international financial institu- 
tions, and determined foreign-exchange rates. As the central bank, 
the Hungarian National Bank regulated the money supply using 
credit policy, interest rates, obligatory reserve requirements, and 
other means. The Hungarian National Bank was a member of the 
International Bank for Economic Cooperation and the International 
Investment Bank, both headquartered in Moscow. It was also a 
shareholder in the Bank for International Settlements in Basel, 
Switzerland, and owned the Hungarian International Bank in Brit- 
ain and the Central Wechsel- und Creditbank A.G. in Austria. 

The reform created five major commercial banks: the Hungar- 
ian Foreign Trade Bank, the General Banking and Trust Com- 
pany, the Hungarian Credit Bank, the National Commercial and 
Credit Bank, and the Credit Bank of Budapest. They were all 
Hungarian-owned joint-stock companies and were licensed to per- 
form a full range of commercial-banking services and provide short- 
term credits for technical-development projects and the implemen- 
tation of new technology. The government did not permit these 
banks to establish direct foreign banking relations, however, or to 
offer banking services to individuals. The Hungarian Foreign Trade 
Bank handled foreign-currency exchange, countertrade, letters of 
credit, and industrial cooperation deals. In addition, it provided 
short-term import and export credits and loans for projects geared 
toward expanding exports. Eleven smaller financial institutions also 
offered commercial-banking services. 

Hungary has joined with foreign investors to form several other 
commercial banks. The Central-European International Bank 
(CIB), which had US$436 million in assets in 1986, performed lease 
financing and prefinancing of export contracts. Founded in 1979, 
CIB was the first offshore bank (a bank set up in a foreign country 
to take advantage of the particular regulatory environment of that 



126 



The Economy 



country) in a Comecon country and the first joint venture in Hun- 
gary in which Western partners took a majority stake. The Hun- 
garian National Bank held a 34-percent share, and six Western banks 
each held 11 -percent shares. Another commercial bank, Citibank 
Budapest, was a joint venture of Citibank Overseas Investment Cor- 
poration and the Central Wechsel- und Creditbank A.G. Citibank 
Budapest was the first Western bank permitted to take direct part 
in commercial banking activities in Hungary. It was a full-service 
commercial bank that operated in forints and convertible curren- 
cies. Unicbank was a third commercial bank offering equity financing 
for new and expanding ventures and short-, medium-, and long- 
term loans to state-owned enterprises, cooperatives, joint ventures, 
and private businesses. Six Hungarian financial institutions and 
cooperative banks from Austria and West Germany joined with the 
International Finance Corporation, a subsidiary of the World Bank, 
to form Unicbank in 1987. 

Other than local savings cooperatives, Hungary's National Sav- 
ings Bank was the only financial institution permitted to serve in- 
dividuals in the late 1980s. The National Savings Bank handled 
savings accounts, made loans to individuals and private businesses, 
and engaged in foreign currency exchanges through a countrywide 
network of branches. The bank also handled convertible-currency 
accounts for Westerners, offering competitive interest rates and pro- 
tection from Western tax authorities. Other small venture-capital 
institutions allowed by a 1982 government decree provided either 
credit or equity to new businesses engaged in innovation, techni- 
cal development, and the like, that the traditional financial insti- 
tutions were not equipped or inclined to finance. 

In addition to these financial institutions, in the late 1980s Hun- 
gary had two separate insurance companies. Spurred by rising in- 
flation in Hungary, the insurance companies had become strong 
advocates of further economic reform, especially the broadening 
of laws on equity investment. One of the companies made direct 
investments in a private hotel and a brewery and planned to in- 
vest in the construction of office buildings. 

Credit Criteria 

After several rounds of reform, credit decisions often remained 
unrelated to the past profitability or creditworthiness of the poten- 
tial borrower, and the government often used the credit system to 
bail out enterprises operating at a loss. In cooperation with other 
banks and financial institutions, the Hungarian National Bank is- 
sued "Guiding Principles on Credit Policy" as part of the state 
five-year plan. Credits were extended under varying conditions, 



127 



Hungary: A Country Study 

with different interest rates, maturities, and priorities to influence 
development in harmony with the national plan. The directives 
of the Hungarian National Bank were binding on all other parts 
of the banking system. 

Financial Instruments 

Before reforms were enacted in 1 983 , enterprises had no options 
other than depositing their after-tax profits in bank accounts or 
investing them in their own operations, and individuals had no 
options other than maintaining savings accounts or investing in 
housing or real estate. In 1989 enterprises could deposit funds at 
a number of banks; invest in their own plants; lend money to other 
enterprises through inter-enterprise loans; and buy, issue, and trade 
stocks and bonds. Individuals could invest their funds in a savings 
bank, purchase bonds, lend money to other individuals, or invest 
in silent partnerships. The government hoped the development of 
these new investment opportunities would boost enterprise-profit 
and personal-income incentives, encourage voluntary savings by 
enterprises and the population, funnel more capital to efficient enter- 
prises and more productive endeavors, and conversely reduce the 
capital flow to inefficient enterprises and wasteful projects. In 1989 
it was still uncertain whether these reforms would produce the 
desired effects. 

The government allowed agricultural cooperatives to issue up 
to 200,000 forints (approximately US$3,225) in bonds to mem- 
bers as well as nonmembers beginning in 1984, and the authori- 
ties later expanded the right to issue bonds to industrial and other 
enterprises. In 1987 enterprises issued bonds worth about US$354 
million, up from US$87.3 million the year before. Bond issuance 
accounted for about 7 percent of total private savings and about 
10 percent of total investment. By early 1988, banks, enterprises, 
local councils, agricultural and industrial cooperatives, hospitals, 
and other entities had issued about US$500 million in bonds. About 
100,000 individuals owned 60 percent of the bonds; institutions 
held the remainder. Returns ranged from 9 to 12 percent and were 
higher than the interest paid on savings accounts. The government 
taxed interest on bonds issued after January 1, 1988, at a flat rate 
of 20 percent. 

In early 1987, the government legalized the capitalization of 
enterprises through the sale of stock without prior authorization. 
By early 1988, investors had purchased about US$555 million worth 
of stock in sixteen banks and about fifty enterprises and joint ven- 
tures. In the same year, about twenty financial and banking insti- 
tutions founded a small stock exchange. The exchange opened for 



128 



The Economy 



trading only once every two weeks, but its founders hoped to ex- 
pand its operation and introduce a fully computerized trading sys- 
tem. Trading was limited because the government, through the 
Hungarian National Bank, owned most of the shares. By 1989 at 
least one enterprise had launched an employee stock ownership plan, 
and the government had proposed a law lifting existing restrictions 
on employee stockholding in order to tap uninvested individual sav- 
ings and give employees a sense of common purpose with their 
enterprises. The opening of stock and bond markets prompted 
former Ministry of Finance employees to create a private company 
to perform independent assessments of individual enterprises. 

Bankruptcy 

In 1986 Hungary became the first communist country to enact 
a bankruptcy law. The law sought to induce enterprises to become 
profitable and less reliant on state subsidies, which in 1987 con- 
sumed about 23 percent of the national budget. Under the law, 
creditors, unpaid suppliers, and other enterprises could initiate 
bankruptcy proceedings against any insolvent or delinquent enter- 
prise except agricultural collectives. The National Reorganization 
and Liquidation Board, which oversaw the bankruptcy process, 
attempted arbitration and reorganization before final liquidation. 
Workers who lost their jobs as a result of liquidation were entitled 
to unemployment benefits. 

Although by 1987 claimants had filed bankruptcy actions against 
fifty-five enterprises, including one large construction firm, the 
government had not enforced the bankruptcy law vigorously. 
Government interference in the market remained so widespread 
that in bankruptcy proceedings unprofitable enterprises could 
justifiably argue that their losses were only marginally related to 
efficiency or managerial decisions. Despite proclamations that 
profitability was the main standard for judging enterprise perfor- 
mance, the government continued to compensate firms operating 
at a loss with subsidies, tax breaks, credits, preferential treatment 
in price setting, and other means. The government extracted the 
earnings of profit-making enterprises to fund these measures. 

Industrial Organization 

In a centrally planned economy, only branch ministries and other 
government bodies can establish production and distribution enter- 
prises, which are usually very large and have a regional or nation- 
wide monopoly in their business activity. Enterprises carry on 
official economic relations through the ministerial bureaucracy 



129 



Hungary: A Country Study 

rather than through a market. State organs appoint, evaluate, 
promote, and dismiss enterprise managers, whose main responsi- 
bility is to meet or exceed plan targets. 

Industrial organization in Hungary followed the pattern of a 
command economy until 1968, when the government granted en- 
terprises a modicum of autonomy. Reform advocates were not, 
however, powerful enough to force a restructuring of Hungary's 
industrial institutions. In the late 1970s, Hungary had the world's 
most concentrated industrial organization, with 699 state enter- 
prises employing an average of 1 ,569 people each. The bureaucracy 
functioned in many ways as it did before the reform, supervising 
and directing large enterprises and trusts, thus stifling the develop- 
ment of true enterprise autonomy and a market mechanism. 

On several occasions in the 1980s, the government adopted mea- 
sures to decentralize Hungary's highly concentrated industrial or- 
ganization in order to promote enterprise independence, flexibility, 
and efficiency. In 1981 the authorities eased restrictions on creat- 
ing small- and medium-sized enterprises in the state, collective, 
and private sectors. The government merged three industrial minis- 
tries into the single Ministry of Industry in order to shrink the bu- 
reaucracy and cut the informal channels of influence that existed 
between the ministries and supposedly independent enterprises. 
Between 1979 and 1984, the authorities broke up 14 of the coun- 
try's 28 trusts and divided a number of large enterprises into more 
than 300 smaller entities. However, despite the government's ef- 
forts, Hungary's industrial organization remained one of the world's 
most highly concentrated. This concentration led to the creation 
of monopolies that suffocated competition in many production areas . 
In the late 1980s, the central government also continued to expect 
the Ministry of Industry to ensure supplies, and both the govern- 
ment and the enterprises continued to expect the ministry to in- 
tervene to remedy imbalances. 

Also in the 1980s, the government took steps to simplify the com- 
plicated and time-consuming process of starting a business. A 
minister, the head of a nationwide government body, or a local 
council with prior approval from the minister of finance could found 
a state-owned enterprise. The founder defined the enterprise's in- 
itial activity and supervised its operation, but other changes have 
eroded much of the control that founders once exercised. In 1985 
most of Hungary's industrial enterprises introduced "democratic 
measures," under which the employees elected top managers di- 
rectly or indirectly. The government also permitted enterprises to 
change their economic activities without prior consultation, 
provided that they informed their founder and the appropriate 



130 



The Economy 



branch ministry of the change. Enterprise councils or collective 
management were managing 77 percent of the industrial enterprises 
by 1986, while the Ministry of Industry continued to supervise the 
remainder. Even under "industrial democracy," an enterprise's 
founder could veto candidates for director and dismiss elected direc- 
tors, and ministries still exercised critical influence. As Janos 
Kornai, a leading Hungarian economist, has written, despite "in- 
dustrial democracy" and the authorities' call for profitability and 
attention to the market, enterprise managers know that their 
"career, the firm's life and death, taxes, subsidies and credit, prices 
and wages, all financial 'regulators' affecting the firm's prosper- 
ity, depend more on the higher authorities than on market per- 
formance." 

In 1982 the government provided for the creation of semiprivate 
and private industrial ventures, including economic work cooper- 
atives (EWCs) and independent contract work associations 
(ICWAs), to encourage entrepreneurship and competition. EWCs 
were groups of no more than thirty workers employed by a state- 
owned enterprise who were allowed to use the enterprise's ma- 
chinery outside normal working hours to produce goods under 
special contracts. The workers needed the enterprise's permission 
to establish an EWC, and the enterprise often entered into con- 
tracts with the EWC itself. The workers received far higher wages 
for this additional work than they did for their regular jobs. In 1982 
approximately 25,000 workers participated in 2,775 EWCs; by the 
end of 1986, approximately 450,000 workers participated in 35,205 
EWCs. ICWAs were self-organized and self-capitalized private 
groups that performed work under contract but had no affiliation 
to any single state-owned enterprise. About half of an ICWA's 
members worked for the group full time. In 1982 Hungary had 
2,341 ICWAs; by October 1983, that number had climbed to 4,463. 

Agricultural Organization 

In a traditional centrally planned economy, state and collective 
farms play the key role in agricultural production; small private- 
plot farming is tolerated but is expected to "wither away." The 
state makes production and marketing decisions for the farms, and 
individual state-farm managers and collective-farm members have 
little input into decision making. 

Hungary collectivized its agricultural sector in two campaigns 
beginning in 1949 and ending in 1961. In the first campaign, the 
government coerced peasants to move to state and collective farms, 
enforced compulsory delivery quotas and high taxes, and set prices 
artificially low to gain control of agriculture and use it to generate 



131 



Hungary: A Country Study 

capital needed for industrial development (see Rakosi's Rule, ch. 1). 
Peasants reacted by slowing production and departing from the 
collective farms in great numbers, especially during the Revolu- 
tion of 1956 (see Revolution of 1956, ch. 1). The government 
changed its tactics in the second campaign, which began in the late 
1950s. The authorities relied more on persuasion than coercion and 
eliminated compulsory deliveries, increased material incentives, 
furnished loans, offered tax breaks, and provided seed, fertilizers, 
and farm equipment. By 1960 about 90 percent of Hungary's farm- 
land was collectivized, and in 1961 nearly 94 percent of the agricul- 
tural earners worked in the socialist sector. 

After the mid-1960s, the agricultural sector often served as a testing 
ground for reforms later introduced into the overall economic sys- 
tem. In the 1965-67 period, the government eliminated obligatory 
plan targets, allowed farms to plan production, loosened restrictions 
on self- financing, and permitted production on private plots. After 
the NEM was introduced in 1968, cooperative farms gained true 
autonomy. In the 1980s, agricultural producers could buy inputs 
from a variety of sources and sell to purchasers of their choice. 

Large-Scale Farming 

Large-scale farming — made up of state and cooperative farms — 
focused on such activities as grain and fodder production, which 
were capital-intensive and in which economies of scale were most 
significant. A 1985 law transformed state farms from state- 
administered organizations into self-governing enterprises under 
the supervision of the Ministry of Agriculture and Food. However, 
state farms were subject to more state control than cooperatives 
in such matters as appointment of managers and the use of profits, 
and state-farm employees were government employees who worked 
for fixed wages and bonuses. 

A cooperative farm was owned and managed by its members, 
who elected a chairman to manage the farm according to its charter. 
Although cooperative farms could employ workers, cooperative 
members were technically not "employees." The cooperative paid 
employees a set wage; members received a base salary and a year- 
end dividend based on net profits. Cooperatives were also freer 
than state farms in deciding how to use their profits, and many 
cooperatives delegated certain operations to autonomous work teams 
or individuals who divided the operation's net profits. The cooper- 
ative farms owned only about half the land they worked; the state 
and individuals owned the rest. 

In the late 1980s, the government still fixed prices for a large 
portion of agricultural production, including corn, wheat, and beef 



132 



Farm house in Tata 
Courtesy Sam and Sarah Stulberg 



cattle. In addition, all state and cooperative farms received some 
form of state subsidy, and about 27 percent received fixed-rate sub- 
sidies for farming low-quality land. Hungary's large-scale farm- 
ing sector has become increasingly concentrated as state and 
cooperative farms have merged. Between 1960 and 1986, the num- 
ber of agricultural cooperatives dropped by 72 percent to 1,260. 
The amount of arable land per cooperative stood at 3,024 hectares 
in 1986. 

Small-Scale Farming 

Small-scale producers — individuals or small groups who tilled 
household plots or operated small farms — concentrated more on 
labor-intensive output or activities in which the risks of investment 
were to be assumed by those doing the work. In the late 1980s, 
Hungary had three types of small-scale farming units: approxi- 
mately 623,000 household plots of cooperative members, about 
792,000 small auxiliary farms of nonagricultural or state-farm em- 
ployees, and a few private farms. Approximately 63 percent of the 
population participated in the small-scale agriculture sector. The 
combined contribution of household plots and auxiliary and pri- 
vate farms to gross agricultural output was 31.5 percent in 1975 



133 



Hungary: A Country Study 



and 31.3 percent in 1986. Successful integration of small-scale farm- 
ing into the agricultural sector kept overall production levels high. 

The government imposed few restrictions on the sale of output 
in the small-scale farming sector, and supply and demand deter- 
mined prices in a free market. Thus, producers had a strong in- 
centive to work hard and produce more. Before the mid-1980s, 
cooperatives were hostile to household producers. In the late 1980s, 
however, officials proclaimed that private household farming was 
a permanent component of agriculture under socialism. The cen- 
tral government encouraged cooperatives to assist members with 
household plots to boost production by providing seed, transport, 
machinery, advice, and marketing assistance. Household producers 
also qualified for subsidies, tax breaks, loans, and discount prices 
for machinery and agricultural chemicals. Regulations limited 
the size of household plots to 0.6 hectares of cropland and 0.23 
hectares of vineyard or orchard per worker. The government aban- 
doned earlier limits on livestock. Pensioners, housewives, depen- 
dents, and others performed most of the work on household plots 
and small-scale farms. Their labor amounted to about 2.3 billion 
man-hours annually and outstripped the total number of man-hours 
worked in large-scale farming. 

A ncillary A c tivities 

The 1 968 reform allowed agricultural enterprises to diversify into 
nonagricultural economic activities. Twenty years later, the govern- 
ment granted cooperatives the right to change their internal struc- 
ture, to engage in new activities, and to extend their involvement 
in nonagricultural production without the permission of regulato- 
ry bodies. State farms and cooperatives were engaged in food 
processing, machinery repair, parts production for manufactur- 
ing enterprises, construction, trade, and the restaurant business. 
Several large-scale farms developed "technically operated produc- 
tion systems" for crop production, horticulture, and animal hus- 
bandry that used state-of-the-art technology. The farms sold these 
systems, which included input and output programs and consult- 
ing services, to other large-scale farms. These systems have acceler- 
ated the modernization of the agricultural sector. 

The nonagricultural activities of state and cooperative farms have 
increased profits and tapped manpower once lost during off-seasons. 
In 1983 nonagricultural activities accounted for 47 percent of state- 
farm profits and 44 percent of cooperative-farm profits. By 1988 
the farms' ancillary activities accounted for more than 7 percent 
of Hungary's total industrial production. 



134 



The Economy 



Private Activity 

Perhaps the most significant aspect of the economic reform and 
the leadership's most striking break with Marxist-Leninist ideology 
has been the expansion of the private sector. The government de- 
cided to allow the emergence of private enterprise because it be- 
lieved that private entrepreneurs would increase competition in 
some areas, fill demand for goods and services that state-owned 
enterprises had been unable or unwilling to meet, and create work 
for people who would lose their jobs as unprofitable enterprises re- 
organized to become more efficient. Changes in the Domestic Trade 
Law in 1986 opened new areas to private entrepreneurs, especially 
in services. A year later, the government allowed private businesses 
in a number of categories to employ twenty to thirty workers. A 
law passed in 1988 allowed the establishment of limited partnerships, 
which could include an unlimited number of partners and employees 
and operate in all fields except finance. However, private business- 
es continued to suffer from restricted access to capital from state- 
owned banks and thus had to depend on private and extralegal loans 
that did not carry full legal protection. 

Small lamily-operated businesses remained the rule in the pri- 
vate sector, and in 1987 only about 300 private businesses employed 
more than six people. Most entrepreneurs ran their businesses as 
a part-time activity in order to supplement their earnings from a 
job in the state sector that provided social benefits. In addition to 
the household plots, private farms, economic work cooperatives, 
and independent contract work associations, private business people 
were operating 28,965 retail shops, restaurants, and other busi- 
nesses in 1986, more than twice the total in 1980. In addition to 
private restaurants and stores, which accounted for about 7 per- 
cent of domestic trade in 1985, entrepreneurs had established 
computer-software companies, construction firms, service busi- 
nesses, and a theater. Individuals could also contract to operate 
state- or cooperative-owned retail stores or restaurants and retain 
all profits over the contract cost. In 1986 contractors operated about 
12 percent of Hungary's shops and 41 percent of its food-service 
establishments. 

Conflict-Resolution Mechanisms 

In countries with a command economy, the ruling communist 
party generally denies the existence of antagonistic conflicts that 
arise between groups with differing economic interests. The leader- 
ship suppresses open expression of these conflicts and resolves them 
behind closed doors. When authorities reform such an economic 



135 



Hungary: A Country Study 

system by introducing market mechanisms, they acknowledge that 
economic, and therefore political, conflict arises between various 
groups and that the authorities must devise political mechanisms 
to resolve them. The market mechanism resolves certain conflicts, 
such as disputes between buyers and sellers or creditors and bor- 
rowers, but new conflict-resolution mechanisms are necessary to 
resolve broader conflicts. 

As of the late 1980s, the Hungarian leadership had chosen to 
tackle this problem by implementing conflict-resolution devices that 
did not threaten the HSWP's monopoly of power. The govern- 
ment introduced electoral reform, granted the judiciary greater in- 
dependence to administer justice according to legal criteria, and 
encouraged trade unions to become more active in defending the 
interests of the workers against enterprise managers (see State Ap- 
paratus, ch. 4). Trade unions obtained the right to call strikes when 
management decisions disregarded the law or breached a collec- 
tive contract or "socialist morality"; however, the authorities toler- 
ated no conflict between the unions' goals and those of the regime 
(see Mass Organizations, ch. 2). The government also encouraged 
the press to publicize abuses of power by management (see Mass 
Media, ch. 4). 

After the 1968 reform, organizations also emerged to represent 
economic interest groups, and some of these organizations acquired 
a growing influence in party and governmental decision making. 
The government required private and semiprivate entrepreneurs 
to become members of the Small Craftsmen's National Associa- 
tion, the Small Tradesmen's National Association, or the Indus- 
trial Cooperatives' National Council. In 1988, about 900 small 
entrepreneurs founded the National Association of Entrepreneurs, 
which worked through Hungary's Chamber of Commerce. In the 
late 1980s, the National Association of Entrepreneurs actively par- 
ticipated in the debate over a law on business organization. 

Economic Sectors 

Industry overtook agriculture in the postwar era to become the 
predominant economic sector. In 1986 industry accounted for 50.7 
percent of gross output; agriculture and forestry, 18.2 percent; non- 
material branches (generally services), 11.3 percent; construction, 
6.3 percent; transportation, post, and telecommunications, 5.6 per- 
cent; trade, 6.1 percent; and water works supply, 1 percent (see 
table 6, Appendix). Industry has taken up most of the investment 
funds since the early 1960s, followed by consumer goods and ser- 
vices (the nonmaterial branches), agriculture, and transportation 
and communications (see table 7, Appendix). Despite a growing 



136 



The Economy 



private sector, state-owned enterprises dominated the economy. 
According to official statistics, state-owned enterprises produced 
63.4 percent of national income in 1986; the cooperative sector 
produced 23 percent; auxiliary farms of private individuals, 6.6 
percent; and the private sector, 7 percent (see table 8, Appendix). 
Economists estimated that the extralegal "third economy" also 
made up a significant portion of the country's economic life. 

Industry 

Energy and raw-material extraction accounted for 13.1 percent 
of gross industrial production in 1986; metallurgy contributed 8.3 
percent; engineering, 25.6 percent; chemicals, 19.1 percent; light 
industry, 12.9 percent; food processing, 16.8 percent; building 
materials, 3.2 percent; and other miscellaneous industry, 1 per- 
cent. As this industrial profile shows, Hungary's industry continued 
to reflect the Stalinist emphasis on heavy industry inherited from 
the immediate postwar period. 

Energy 

Chronic coal-mining problems and shrinking domestic hydro- 
carbon reserves have plagued the economy since the mid-1970s. 
The reliance on imported energy increased steadily from 37.2 per- 
cent in 1970 to 51.3 percent in 1986. The Soviet Union furnished 
most of Hungary's energy imports, but Soviet production setbacks 
and demands for better trade terms complicated Hungary's energy 
supply problems after the mid-1980s. Analysts expected the Soviet 
Union to demand more and better-quality goods from Hungary 
in exchange for its energy exports in the 1990s (see Relations with 
the Soviet Union, ch. 4). 

Hungary slashed investment in coal mining in the late 1960s and 
1970s, when Soviet oil and natural gas were less expensive alter- 
nate fuels. Consequently, coal's share of domestic energy produc- 
tion dropped from 62.7 percent in 1970 to 36.6 percent in 1986. 
Coal accounted for about 26 percent of Hungary's energy consump- 
tion. In the early 1980s, rising oil and natural gas prices prompted 
Hungary to reopen the flow of investment into coal mining but 
the country still suffered from a severe shortage of miners, and its 
mines were unable to keep pace with rising demand. The govern- 
ment approved substantial pay increases for miners in order to at- 
tract new workers. In 1986 Hungary's mines employed 79,566 
workers who labored between sixty and seventy hours per week 
and produced coal worth about US$779 million. Total annual coal 
output has hovered around 24 million tons since 1975, but hard- 
coal production actually fell by about 23 percent between 1975 and 



137 



Hungary: A Country Study 

1986, and the calorific value of coal output declined by about 18 
percent in the same period. Coal, coke, and briquette imports 
totaled US$268 million in 1986. 

Hydrocarbons, including oil, propane, natural gas, and gaso- 
line, accounted for 61 percent of total energy consumption in 1986. 
Natural-gas production has increased considerably since the 
mid-1960s, exceeding 7 billion cubic meters in 1986 and 1987. 
Domestic consumption, however, has far outstripped production 
since 1970, nearly doubling from 5.9 billion cubic meters in 1975 
to 11.5 billion in 1986. Hungary's wells supplied about 94.8 per- 
cent of its natural-gas consumption in 1970 but only 66.1 percent 
in 1986. Natural-gas imports totaled 4.8 billion cubic meters in 
1986 and cost about US$366 million. The Soviet Union supplied 
Hungary with about 90 percent of its natural- gas imports. 

Hungarian wells have pumped about 2 million tons of crude oil 
yearly since 1975, mostly from the Szeged region, but observers 
expected production to decline after 1990. Oil imports totaled 
US$1.1 billion in 1986, while exports added up to about US$332 
million. Hungary exported oil by reselling Iranian and other Middle 
Eastern oil acquired in various compensation schemes. 

Hungary launched an energy rationalization program in the early 
1980s aimed at maintaining levels of domestic oil and gas produc- 
tion attained in the mid-1980s, increasing exploration, and sub- 
stituting natural gas and other fuels for oil. The conservation 
program, backed by stiff price hikes, netted positive results. Oil 
consumption dipped from 12.5 million tons in 1979 to 9.1 million 
tons in 1985, and Hungary's imports of petroleum and petroleum 
products dropped from about US$1.3 billion in 1985 to US$1.1 
billion in 1986. 

Hungary's power plants had a 6.8-billion-kilowatt capacity in 
1986 and generated 28 billion kilowatt-hours of electricity, almost 
double the amount generated in 1970. The increase failed, however, 
to keep pace with demand as consumption rose from 17.9 billion 
kilowatt-hours in 1970 to 38.6 billion in 1986. Hungary overcame 
the 1986 shortfall by importing 1 1.9 billion kilowatt-hours of elec- 
tricity. Transmission lines from the Soviet Union carried about 
one-third of Hungary's imported electricity. 

In the late 1980s, thermal power stations generated 70 percent 
of Hungary's electricity and burned about 65 percent of Hungary's 
brown coal production and nearly all of its lignite output. Hun- 
gary has constructed large thermal power stations in the last 15 
years, including a 1 .9-million-kilowatt heat and power plant at 
Szazhalombatta in Pest County that generated almost 40 percent 
of the country's electricity. 



138 



The Economy 



Southern Hungary's uranium reserves supplied the 880-million- 
kilowatt Paks nuclear power plant in Tolna County, the country's 
only nuclear power facility. The plant's first reactor went on line 
in 1983, and its second followed a year later. In 1986 the plant 
generated 7.4 billion kilowatt-hours, or about 26.5 percent of the 
nation's electricity output and 19.2 percent of its consumption. 
Hungary and the Soviet Union agreed in 1986 to build four addi- 
tional 440-megawatt reactors at Paks in the next decade. Officials 
hoped that the plant would supply about 40 percent of Hungary's 
electricity by the early 2000s. 

In the late 1980s, Hungary's hydroelectric power stations gener- 
ated less than 1 percent of the country's electricity, but Hungary 
has joined with Czechoslovakia to build two hydroelectric power 
stations on the Danube at Gabcikovo in Czechoslovakia and at 
Nagymaros in Hungary. The project, which was scheduled for com- 
pletion by 1993, received Austrian financial assistance (see Rela- 
tions with Other Communist Neighbors, ch. 4). However, in May 
1989 the Hungarian government suspended work on the power 
station because of public concern over the damage it threatened 
to cause to the environment. The power stations' total projected 
capacity was 3.6 billion kilowatt-hours per year, and their estimated 
cost was US$1.4 billion. 

Mineral Mining and Metallurgy 

The aluminum industry developed rapidly after World War II 
and in the late 1980s employed more than 40,000 workers. The 
production of bauxite (used in making aluminum) more than dou- 
bled since the war, reaching more than 3 million tons in 1986, while 
alumina (aluminum oxide) output totaled 856,000 tons in the same 
year. Increased bauxite production was depleting deposits near the 
surface, however, and costly deep mining had become necessary. 
Conversion of alumina into aluminum is highly energy intensive, 
and a lack of inexpensive electricity prevented Hungary from con- 
verting more than 25 percent of its alumina output. Therefore, 
Hungary had to import about 65 percent of the aluminum con- 
sumed by its factories each year. Under an exchange agreement 
signed in 1985, Hungary exported 530,000 tons of alumina to the 
Soviet Union each year for smelting in return for 205,000 tons of 
aluminum. In the late 1980s, Hungary received significantly less 
aluminum per unit of alumina than under previous agreements, 
largely because the price of aluminum had risen against the price 
of alumina on world markets since the 1960s. In the late 1980s, 
Hungary's aluminum-fabrication industry concentrated more on 
manufacturing semifinished and specialized products and less on 



139 



Hungary: A Country Study 



bulk production of the metal in the unfinished form. The major 
aluminum processing plant was the Light Metal Works at Szekes- 
fehervar, which had a capacity of approximately 100,000 tons per 
year in the late 1970s. Hungary exported much of its bauxite, alu- 
mina, and aluminum to the Comecon countries. 

Soviet technology and raw-material inputs were key factors in 
the development of Hungary's iron and steel industry in the 1950s. 
The large steel mills at Dunaujvaros in Feher County, Ozd, 
Miskolc, and Budapest have used local low-grade iron ore, but more 
than 80 percent of their raw-material input originated in the Soviet 
Union. In the late 1980s, the industry suffered from several major 
problems. First, Hungary's iron and steel mills were less cost ef- 
fective than West European mills because, among other factors, 
Hungary had to pay to transport and process Soviet ore that had 
only a relatively low (45-50 percent) iron content. Second, the prices 
Hungary received for its iron and steel exports to convertible- 
currency markets had fallen. These exports generated losses for 
the industry, but Hungary continued the trade for several reasons: 
the domestic market could not absorb enough output to maintain 
satisfactory use of the country's mill capacity, the state subsidized 
losses on metallurgical exports, and export income provided the 
industry with the grounds to increase wages. The industry under- 
went a sweeping reorganization as part of a 1987 restructuring pro- 
gram that included the elimination of 2,400 jobs. Hungary produced 
no iron ore in 1986, and analysts expected the country to reduce 
iron and steel output by up to 10 percent in 1988. 

Engineering and Chemicals 

Throughout the postwar period, the engineering and chemical 
branches have been the most important in Hungary's industrial 
sector. The engineering sector employed about 32 percent of Hun- 
gary's industrial workers in 1986 and produced 25.5 percent of the 
country's total industrial output; the chemical sector employed 7.5 
percent of the industrial work force and accounted for 19 percent 
of industrial output. 

Hungary's vehicle-manufacturing subbranch emphasized 
production of buses and axle housing and accounted for about 28 
percent of the engineering branch's output in 1986. Comecon as- 
signed production of large buses to Hungary in the 1950s. Hun- 
gary's Ikarus bus enterprise became the world's fourth-largest bus 
producer, accounting for about 20 percent of the world's bus ex- 
ports in 1980. The engineering branch also produced tractors, diesel 
locomotives, river vessels, floating cranes, machine tools, passenger 



140 



The Economy 



elevators, batteries, telephone equipment, lighting equipment, and 
other products. 

The chemical branch grew faster than any of the other branches 
after the 1960s, and in 1986 the chemical branch's 133 enterprises 
accounted for 19 percent of industrial output. Its main subbranches 
produced fertilizers, pharmaceuticals, and petrochemicals. The 
pharmaceutical industry was more than a century old and accounted 
for 1.5 percent of world production. Hungary ranked second to 
Switzerland in per capita pharmaceutical exports and fifth in the 
world in overall pharmaceutical exports. It was also Comecon's 
largest pharmaceutical supplier. Pharmaceutical production ex- 
panded at a nearly 18 percent annual rate since 1960, satisfying 
80 percent of Hungary's market. Western markets purchased 40 
percent of Hungary's pharmaceutical exports. In 1986 the phar- 
maceutical industry's output totaled about US$513 million. 

Rapidly rising demand for synthetic materials and a desire to 
replace imports with domestic production prompted Hungary to 
begin developing a petrochemical industry on the eve of the 1973 
oil crisis. The project, which required significant investment and 
integration with the Soviet economy, proceeded despite the changes 
that the oil crisis brought to the market. In 1989 five Hungarian 
refineries produced petroleum products, but four were too small 
to take advantage of economies of scale. Analysts expected a large 
portion of Hungary's refinery capacity to remain underutilized until 
sometime in the 1990s. The synthetic-fiber, chemical- additive, and 
phosphorus-fertilizer branches were especially problematic. 

Light Industry and Food Processing 

The government neglected the consumer-oriented light-industry 
and food-processing branches of the economy during its push to 
develop heavy industry in the 1950s. This policy resulted in short- 
ages, poor quality, a narrow product mix, and slow development 
of new products. Since that time, production of light industrial 
goods, such as textiles, garments, furniture, pulp, and other 
products, has improved significantly. In 1985 Hungary exported 
about 65 percent of its silk fabric production, 50 percent of its cloth- 
ing and footwear output, and 25 percent of its textiles. 

Although Hungary has not had food shortages for years, its food- 
processing branch has modernized slowly and produces only a 
limited range of foodstuffs. Given the importance of foodstuffs in 
Hungary's export profile, the slow growth of the food-processing 
industry has prevented the country from capturing potential 
markets. In the late 1980s, the branch's main products included 
wine, flour, canned goods, sugar, beer, dairy products, and meat 



141 



Hungary: A Country Study 

products. After 1970 many state and collective farms set up food- 
processing operations (see Agricultural Organization, this ch.). 

High Technology 

Hungary has developed a small but viable computer industry 
since the late 1960s. The Videoton electronics firm, which was one 
of Eastern Europe's most aggressive computer manufacturers, de- 
veloped several computer models in the 1970s and has exported 
its computer products to West Germany, Austria, Finland, and 
the Comecon countries. Economic reforms in the early 1980s cleared 
the way for state firms, research institutes, private partnerships, 
and even individuals to manufacture personal computers. Hun- 
gary possessed an impressive software-producing capability, and 
many Western countries have purchased Hungarian programs or 
subcontracted with Hungarian designers to develop software. Un- 
fortunately, the microelectronics industry suffered a major blow 
in 1986 when a fire gutted its most important plant, located in 
Budapest. In 1986 the high-technology industry produced 5,128 
small computers, 145,717 semiconductors, and 20,690 integrated 
circuits. 

Agriculture 

The success of the agricultural sector in large part has under- 
pinned the country's high standard of living relative to the other 
countries of Eastern Europe. Agriculture provided an abundance 
of food, that, at least until the late 1980s, reinforced social and po- 
litical stability. Hungary's farms also supplied about 25 percent 
of the country's convertible-currency exports, which were key be- 
cause they funded imports of Western technology vital to indus- 
trial development. But the agricultural system also faced several 
nagging problems, including high production costs, difficulties in 
carving out new markets, and dependence on imported protein 
feeds, agricultural machinery, nonnitrogenous fertilizers, and other 
inputs. 

In the late 1980s, agricultural output was divided about equally 
between plant and animal production. The country's main crops 
were corn, wheat, and sugar beets; its main animal products were 
poultry, hogs, eggs, and milk (see table 9, Appendix). Hungary 
had been a net exporter of grain since 1973 and in the late 1980s 
was Eastern Europe's largest exporter of meat and meat products. 

Hungarian agriculture's capital-intensive nature and its scale of 
production were closer to West European than East European levels. 
The agricultural sector used fewer but more powerful tractors in 
1986 (53,947) than it did in 1970 (67,472). Hungary also reduced 



142 



The Economy 



the amount of irrigated land and cut fertilizer use. Irrigated lands 
shrank from an average of 249,100 hectares in the 1971-75 period 
to 162,600 hectares in 1986. Fertilizer use fell from 224 kilograms 
per hectare in 1975 to 212 in 1986, while manure use grew slightly. 

In 1986 the 129 state farms worked 26.1 percent of the coun- 
try's cultivated land (2,159 hectares), employed 17.6 percent of 
the agricultural work force (163,000), and produced 17.6 percent 
of the country's agricultural gross output (about US$1 .2 billion — see 
table 10, Appendix). Cooperative farming remained the largest so- 
cial sector in the agricultural sector. In 1986 some 1,260 coopera- 
tive farms worked 76 percent of the cultivated land, employed 74. 1 
percent of the agricultural work force (691,000), and produced 51 
percent of the country's agricultural gross output (US$3.4 billion). 

In 1986 cooperative-farm members' household plots combined 
with auxiliary and private farms to produce 31.3 percent of agricul- 
tural gross output. These producers also supplied significant por- 
tions of specific crop and animal products. For example, in 1986 
household plots and private farms produced 76 percent of Hun- 
gary's potatoes, 74.7 percent of its vegetables, 58.6 percent of its 
fruits, 48.8 percent of its wine grapes, 24.1 percent of its cattle, 
55.5 percent of its pigs, and 43.1 percent of its poultry. 

Construction 

In 1986 the construction sector accounted for nearly US$5 bil- 
lion in production. The sector had 165 state-owned construction 
enterprises employing an average of 1,223 workers, 531 coopera- 
tive construction firms with an average of 123 workers, 460 eco- 
nomic work cooperatives with an average of 11 members, 2,745 
private economic partnerships with an average of 8.5 members, 
and 24,229 private crafts people who mainly worked alone. Hous- 
ing accounted for 33.8 percent of construction activity in 1986; in- 
dustrial building construction accounted for 9.5 percent; roadway 
construction, 6.4 percent; and cultural and educational buildings, 
5.1 percent. 

Transportation and Telecommunications 

The nation's transportation and communications systems were 
highly centralized because of Budapest's importance as the capital 
and principal urban center (see fig. 7). Like other East European 
countries, Hungary redirected much of its transport system after 
World War II to accommodate a dramatic increase in trade with 
the Soviet Union. Despite the fact that transportation employed 
about 14 percent of the total work force in the late 1980s, trans- 
portation delays were frequent. 



143 



Hungary: A Country Study 




CZECHOSLOVAKIA 

) 

'(, 

Y 




Figure 7. Transportation System, 1989 



144 




145 



Hungary: A Country Study 

Hungary began constructing the main lines of its railroad sys- 
tem between 1850 and 1900 in order to link Budapest with other 
major cities. In 1986 this system consisted of 7,769 kilometers of 
rail lines, of which 1,128 kilometers were double tracked. Diesel 
and electric locomotives have replaced steam engines, and the length 
of electrified track almost tripled between 1970 and 1986, reach- 
ing about 25 percent of the system. The country's two rail- transport 
enterprises employed about 134,000 workers in 1986. The railroads 
carried about 119 million tons of freight in 1986, about 20 percent 
of which were coal and other fuels; they also carried 232,920 pas- 
sengers. The system improved its fuel consumption per ton- 
kilometer from 1,235 kilojoules in 1970 to 322 in 1986. 

In the late 1980s, Hungary's 140,163 kilometers of roadway, 
21 percent of which were paved with asphalt or concrete, carried 
a greater volume of freight than the railroad. The country's sixty- 
six truck and bus fleets carried 4.5 million passengers and 572 mil- 
lion tons of goods in 1986 and employed 122,000 workers. In 1986 
the nation's truck and bus fleets totaled 163,151 and 25,920 trucks 
and buses, respectively, more than double their size in 1970; pas- 
senger automobiles numbered 1,538,900, including 1,500,800 pri- 
vate automobiles. Hungary has modernized its road system since 
1950, but the roads were still inadequate to handle the country's 
increasing number of private automobiles and heavier domestic 
and international truck traffic. 

The Danube formed the largest part of Hungary's 1,622 kilo- 
meters of navigable waterway. The principal port was Budapest's 
Csepel free port. Dunauvaros was also an important port. In 1986 
Hungary's fleet included 52 passenger boats, 41 tugboats, 236 
barges, and 15 seagoing ships. The river transport system carried 
3.4 million tons of cargo and 4. 1 million passengers, most of whom 
were tourists. 

The national airline, MALEV, flew twenty- four aircraft on forty- 
one international routes in 1986, carrying 1.2 million passengers 
and 16,372 tons of cargo. Hungary discontinued domestic air trans- 
port in 1969. Several major Western airlines flew into Budapest's 
Ferihegy Airport, which in 1986 recorded 18,025 takeoffs and 
departures and served 2.3 million passengers. 

A 5,604-kilometer pipeline network linked Hungary's main oil- 
and natural gas-producing centers with Budapest and other major 
cities. The system transported 20.2 million tons of oil and natural 
gas in 1986. In the mid- to late 1980s, Hungary annually received 
about 1 .2 billion cubic meters of Soviet natural gas through the two 
Friendship pipelines and an additional 4 billion cubic meters through 
the Alliance pipeline. In 1986 Hungary and the Soviet Union began 



146 



Train station in Csopak 
Courtesy Gustav Forster 



negotiations on Hungary's participation in the construction of what 
was to be the longest natural gas pipeline in the world. Planners 
projected completion by 1990. 

In the late 1980s, Hungary continued to suffer from a severe 
shortage of telephone lines. In 1986 the country had 770,200 tele- 
phones, including 524,600 private telephones, which gave it about 
145 telephones per 1,000 persons, an increase of 46 percent since 
1975. Despite this increase, the average wait for the installation 
of a telephone was about fifteen years. Telephone possession was 
one of the clearest indicators of class distinctions in Hungary. A 
1983 study showed that only 6 percent of Hungary's unskilled and 
semiskilled workers had a telephone, while 40 percent of profes- 
sionals had them. The telephone system did not have the capacity 
to accommodate computer telecommunications. In the late 1980s, 
Hungary had two television channels, and it issued more than 2.9 
million television licenses in 1986. Licenses to purchase radios were 
not required after 1980. 

Private Sector 

Small private enterprises have multiplied rapidly since 1982, 
when the government eased legal restrictions. But in 1989, the 



147 



Hungary: A Country Study 

private sector as a whole still made up only a small portion of the 
economy. The government's tally of persons who reported private 
economic activity as their primary occupation showed that the pri- 
vate sector accounted for only 5.1 percent of active earners in 1986. 
The private sector did, however, account for 13.7 percent of the 
active earners involved in construction, 16.5 percent of those in 
transport, and 12.6 percent of those in personal- or economic- service 
businesses. In 1986 Hungary had 150,664 private crafts people, 
up from 86,303 in 1970 and 111,960 in 1981. Just under 52 per- 
cent of the crafts people plied their trade as their principal occupa- 
tion, about 12 percent were pensioners, and 36 percent were 
employed full time in other fields. 

As officially defined, the private sector's contribution to net 
material product rose from only 2.6 percent in 1970 to 3.5 percent 
in 1980 and 7 percent in 1986. Although the private sector's por- 
tion of industrial production only increased from 1 percent in 1970 
to 1.8 percent in 1986, its share of the construction industry more 
than doubled from 6.3 percent in 1970 to 14.5 percent in 1986. 

The Third Economy 

A semilegal or illegal "third economy" operated in Hungary 
as it did in other communist countries. Activities in the third econ- 
omy included holding unofficial second jobs, moonlighting on 
vacations and sick leave, performing outside work during work 
hours, dealing in illegally imported or pilfered goods, lending money 
at high rates, renting property illegally, evading taxes, and brib- 
ing or "tipping" doctors, lawyers, store clerks, and others. In a 
1983 survey, 60 percent of hospital patients admitted they had paid 
their doctors even though Hungary had free national health care. 
Many of those active in the third economy had become relatively 
rich, and tension sometimes arose between the third economy's 
"haves" and the law-abiding "have-nots." The press attributed 
the third economy's existence to three main factors: shortages of 
certain goods and services, an inflation rate that made supplemen- 
tary income necessary, and the fact that many enterprises possessed 
monopolies on certain goods and services. 

Hungary's Economic Research Institute has estimated that in 
the early 1980s Hungarians generated the equivalent of about US$2 
billion per year in unreported income, which equaled about 20 to 
25 percent of their total income and 16 percent of domestic net 
material product. The newly enacted personal-income and value- 
added taxes were in part an attempt to tax unreported incomes, 
and the government created a special office to investigate persons 
who displayed expensive tastes but reported relatively low incomes 



148 



Bus station in Mezokdvesd 
Courtesy Sam and Sarah Stulberg 

(see Economic Regulators, this ch.). Many pro-reform economists 
opposed measures to snuff out illegal economic activities, arguing 
instead for liberalizing private-enterprise laws to include many 
activities considered illegal. 

Foreign Trade 

Hungary can compensate for its paucity of natural resources only 
by engaging in foreign trade, which, in the late 1980s, accounted 
for about half the country's national income. After the Great Depres- 
sion, commerce with Germany dominated Hungary's external trade, 
and agricultural products accounted for most Hungarian exports. 
After World War II, the communist government limited its eco- 
nomic contacts with the West, and the Soviet Union became the 
country's principal trading partner. Hungary significantiy increased 
trade with the West after the 1968 economic reforms when its econ- 
omy could no longer grow without imports of technology and raw 
materials from the Western nations. It signed the General Agree- 
ment on Tariffs and Trade in 1973 and, in the midst of a balance 
of payments crisis, joined the World Bank and the International 
Monetary Fund (IMF — see Glossary) in 1982. Although in the late 
1980s the Soviet Union remained Hungary's principal trading part- 
ner, almost half of Hungary's trade was with Western countries. 
Production shortfalls had forced the Soviet Union to slow exports 



149 



Hungary: A Country Study 



of oil and other key raw materials, forcing Hungary to strive to uti- 
lize raw materials more efficiently and increase exports to the West 
to pay for additional raw-material imports. The need to boost effi- 
ciency and make Hungarian goods competitive on Western mar- 
kets also prodded the government to undertake economic reforms. 

Ever- worsening terms of trade, increasing Western protectionism, 
reduced access to foreign credit, interest-rate increases, and the 
generally slow response of Hungarian enterprises to changing mar- 
ket conditions brought the country serious foreign-trade imbalances 
after 1987. The net foreign hard currency debt more than dou- 
bled from US$7 billion in 1981 to US$15.5 billion in 1987, mak- 
ing its per capita foreign debt the highest among the communist 
states. Hungary had to spend between 65 and 70 percent of its 
convertible- currency earnings to service its debt. Despite the fact 
that the economy did not meet the government's debt-reduction 
target in 1987, analysts predicted that the convertible-currency debt 
crisis would recede as a government austerity program began to 
take hold. The debt and current accounts deficit, which analysts 
estimated to be US$1 .2 billion in 1987, prompted Hungary to con- 
clude a standby credit agreement with the IMF in 1988. 

Organization of Foreign Trade 

The government maintained a state monopoly on foreign trade 
until 1988, when it began allowing all but a few production en- 
terprises to participate in foreign trade. In 1989 the country's 
once-powerful foreign-trade enterprises still existed, but they held 
exclusive trading rights on only a narrow range of goods. The 
Ministry of Trade's chief control instrument on foreign trade was 
the licensing of imports and exports, which the ministry could use 
to avoid balance of trade and balance of payments disequilibria. 
For example, the ministry could deny an enterprise a license to 
export a product to the Comecon market in order to encourage 
its export to the convertible- currency market. The ministry issued 
import licenses according to a list of priority items. Highest-priority 
goods were those necessary to maintain current production, includ- 
ing raw materials, semifinished goods, and spare parts. Second pri- 
ority went to capital goods and machinery that could quickly boost 
hard-currency exports. Basic consumer goods and nonessential and 
luxury items constituted the two lowest categories. The govern- 
ment enacted austerity measures in 1 988 that limited imports almost 
exclusively to the most essential items. 

Cooperation Agreements and Joint Ventures 

In addition to engaging in direct foreign trade in the late 
1980s, enterprises and foreign firms could enter into cooperation 



150 



The Economy 



agreements or joint ventures that gave Hungary access to Western 
technology and opened new markets. Cooperation agreements took 
many forms, including the sale of a plant or production line with 
partial payment to the seller made from products from the plant 
or line; the subcontracting of a domestic firm to manufacture 
products; license agreements under which the foreign partner 
provided technology to the Hungarian partner to produce a par- 
ticular product; and production agreements under which the for- 
eign partner provided equipment, expertise, manufacturing 
processes, and sometimes financing to the domestic enterprise and 
then purchased all or part of the output. In the late 1980s, the 
government levied a 40-percent tax on profits from cooperation 
agreements. The 1988 foreign- trade law gave Hungarian enter- 
prises greater freedom to conclude cooperation agreements. Western 
companies tended to prefer cooperation agreements to joint ven- 
tures because cooperation agreements were more flexible and car- 
ried less risk. 

The closest cooperation between Hungarian and foreign firms 
took place through joint ventures, which the government first 
legalized in 1972. In a joint venture, a foreign firm and a domes- 
tic enterprise each put up capital to establish a new company to 
produce goods or services. Hungarian law required that the Hun- 
garian enterprise hold at least a 51 percent stake, except in such 
areas as banking and services, in which the Ministry of Finance 
could authorize the foreign owner to be the majority shareholder. 
In 1985 a West German cosmetics firm became the first nonbank- 
ing Western firm to hold a 51 percent stake in a joint venture with 
a Hungarian enterprise. The government levied a 20-percent profit 
tax on joint ventures and permitted the foreign partner to repatri- 
ate its share of the earnings in convertible currency. The Hungar- 
ian National Bank guaranteed the foreign partner's share of the 
capital against state takeover subsequent to the agreement. When 
a joint venture terminated, the foreign firm could repatriate its share 
of the capital investment. Only three joint ventures were operat- 
ing in 1977, and in an effort to entice more foreign partners the 
government broadened the joint-venture law several times and 
created customs-free zones in 1983. The number of joint ventures 
rose to 35 in 1984 and to more than 100 in 1988. Most of Hun- 
gary's joint ventures involved companies from West Germany, Aus- 
tria, Switzerland, the United States, and Sweden. 

Hungarian enterprises frequently requested foreign partners in 
joint ventures or cooperation agreements to take payment in kind 
and then market the goods in the West. Analysts estimated that 
these and other countertrade arrangements have made up a sizable 
share of Hungary's trade with the West since the early 1970s, but 



151 



Hungary: A Country Study 

exact figures were unavailable in mid- 1989. The frequency and size 
of requests for countertrade increased after Hungary began austerity 
measures to reduce its foreign debt and trade deficit in 1988. 

Trade Volume and Structure 

Total trade turnover, at 1986 prices, rose from US$13.4 billion 
in 1981 to US$18.8 billion in 1986. Hungary's exports increased 
from US$6.5 billion to US$9.2 billion in the same period, while 
its imports increased from US$6.9 billion to US$9.6 billion. 

The principal imports were crude oil, coal, iron ore, copper, raw 
materials for the plastics industry, chemical fibers, artificial fer- 
tilizers, paper, cotton, animal feed, and capital and consumer goods. 
Raw materials, semifinished goods, and spare parts accounted for 
44.8 percent of imports in 1986. Energy imports increased from 
6 percent of total imports in 1970 to 19.4 percent in 1986 (see 
table 11, Appendix). 

Hungary's main exports included agricultural products, phar- 
maceuticals, bauxite, machine tools, buses, telecommunications and 
electronic equipment, lighting equipment, industrial rubber goods, 
ball bearings, rolled steel and aluminum, clothing, and footwear. 
In 1986 raw materials, semifinished goods, and spare parts ac- 
counted for 30.2 percent of exports. Exports of machinery, trans- 
port equipment, and capital goods increased from 16.7 percent of 
total exports in 1970 to 30 percent in 1986. Likewise, agricultural 
exports rose from 7.4 percent of total exports in 1970 to 20.1 per- 
cent in 1986. Grain exports increased from an average of about 
1 million tons a year from 1976-80 to nearly 2.2 million tons in 
1986. Meat exports also rose, from an average of 285,000 tons a 
year from 1976-80 to 421,000 tons in 1986 (see table 12, Appendix). 

Tourism enhanced Hungary's hard-currency balance sheet. The 
number of foreign tourists visiting Hungary rose from 4 million 
in 1984 to 10.6 million in 1986, including 2 million from noncom- 
munist countries. Tourist spending netted Hungary about US$371 
million in 1986. Most visitors came from Czechoslovakia, Poland, 
Austria, and Yugoslavia; approximately 117,000 Americans visit- 
ed the country in 1985. About 6.3 million Hungarians traveled 
abroad in 1986, mostly in Eastern Europe. In 1988 the govern- 
ment further eased restrictions on its citizens' foreign travel. 

Trade Partners 

Hungary's foreign trade was about evenly split between the 
Comecon countries and the West. Trade with the Comecon market 
accounted for 53.1 percent of its trade turnover in 1986, an in- 
crease from 49.3 percent in 1980. Total trade turnover with the 



152 



The Economy 



Comecon countries, measured at 1986 prices, increased from about 
US$6.8 billion in 1981 to US$10 billion in 1986. Exports to the 
Comecon countries increased from US$3.6 billion to US$5.1 bil- 
lion in the same period, while its imports from those countries rose 
from US$3.3 billion to US$4.9 billion. 

In 1986 more than 90 percent of the country's energy imports, 
42.5 percent of its raw- and basic-materials imports, and more than 
60 percent of its capital- goods imports came from the Comecon 
countries. In addition, 48 percent of exports of raw-materials and 
semifinished goods, 84.3 percent of its machinery and capital-goods 
exports, and more than half of the exports of industrial consumer 
goods and agricultural products went to the Comecon market. 

In the late 1980s, the Soviet Union, plus three other Comecon 
countries — the German Democratic Republic (East Germany), 
Czechoslovakia, and Poland — made up four of Hungary's six most 
important trading partners. The Soviet Union was Hungary's main 
trading partner, accounting for more than 30 percent of Hun- 
gary's overall trade and 60 percent of its trade with the Comecon 
countries (see table 13, Appendix). Raw materials and energy domi- 
nated the structure of Soviet-Hungarian trade. Under the Soviet- 
Hungarian trade agreement for the Seventh Five- Year Plan (1986- 
90), Hungary agreed to export foodstuffs, computers, telecommu- 
nications equipment, buses, and other finished goods to the Soviet 
Union. In turn, Hungary imported mining equipment, heavy 
machinery, some consumer goods, and even larger amounts of 
Soviet raw materials and energy than it did in the preceding plan. 
East Germany, Hungary's third largest trading partner, Czecho- 
slovakia, and Poland accounted for about 16.5 percent of Hun- 
gary's overall trade and 31.1 percent of its trade with the Comecon 
countries. 

About half of Hungary's trade was with Western countries. Trade 
turnover with the Western world was US$7.9 billion in 1986; im- 
ports totaled US$4.2 billion, and exports amounted to US$3.7 
billion. 

In June 1988, Hungary and the European Economic Commu- 
nity (EEC) signed a ten-year trade agreement, the first of its kind 
between the EEC and a Comecon country. The agreement provided 
for a reduction of quotas on about 2,000 items by 1995. Hungar- 
ian officials estimated that the trade would boost Hungary's hard- 
currency exports from US$25 million to US$50 million by 1995. 
In 1987 the EEC countries accounted for 24.4 percent of Hungary's 
imports and 19.9 percent of its exports. Hungary accumulated a 
US$5 billion trade deficit with the EEC countries between 1979 
and 1986. 



153 



Hungary: A Country Study 

West Germany was Hungary's largest Western trading partner 
and second largest trading partner overall. Raw materials and semi- 
finished goods made up about 65 percent of the US$1.2 billion 
of goods that Hungary imported from West Germany in 1986; 
machinery and equipment made up about another 20 percent. 
Hungary's exports to West Germany totaled US$771 million and 
included foodstuffs, live animals, machinery, chemical products, 
textiles, clothing, pharmaceuticals, and aluminum products. As of 
1987, West German banks had furnished Hungary with more than 
US$16 billion in loans; in the same year, the West German govern- 
ment guaranteed a twelve-year credit for Hungary, marking the 
first time that the Hungarian government has accepted credits 
backed by a foreign government. In addition, Hungary and West 
Germany concluded an investment protection agreement in 1986 
under which the Bonn government, based on Hungarian assur- 
ances, guaranteed that West German firms with investments in 
Hungary would be able to repatriate their profits and not be sub- 
ject to nationalization of their assets. In 1987 West German firms 
had about 330 cooperation agreements with Hungarian firms; more 
than half were in engineering and machine industries. Siemens, 
Krupp, Telefunken, Volkswagen, and smaller West German firms 
were involved in about thirty joint ventures with Hungarian enter- 
prises (see Relations with the West, ch. 4). 

Austria was Hungary's second largest Western trading partner. 
In 1987 Hungary imported Austrian goods worth US$574 million 
and exported US$594 million in goods to Austria. In 1987 Aus- 
trian and Hungarian firms were engaged in 120 cooperation agree- 
ments and fourteen joint ventures. 

Hungary and the United States signed their first trade agree- 
ment in 1978, and Hungarian goods bound for American ports 
enjoyed most-favored-nation status. In 1988 ten United States- 
Hungarian joint ventures operated in Hungary, but, excluding Citi- 
bank Budapest's holdings, the total of United States capital invested 
in Hungary stood at a mere US$58 million. In 1987 bilateral United 
States-Hungarian trade reached its highest mark ever at more than 
US$500 million. Exports to the United States, however, accounted 
for only 2.3 percent of Hungary's exports in 1986, and imports 
barely exceeded 2 percent of Hungary's total imports. 

Trade relations with Japan were growing as Hungary sought 
Japanese capital and technology and hoped to gain a share of the 
Japanese market as that country opened its doors to foreign trade. 
Hungary imported US$142 million worth of Japanese goods in 1986 
while exporting only US$42.4 million in goods. Basic materials and 
semifinished goods accounted for more than half of Hungary's 



154 



The Economy 



Japanese imports; machinery and consumer goods accounted for 
27 percent and 19 percent, respectively. More than 65 percent of 
Hungary's exports to Japan were basic materials and semifinished 
products, including pharmaceuticals, aluminum, and chemical 
products; foodstuffs accounted for another 16 percent. In addition, 
Hungary and Japan formed their first joint venture in 1984 to 
produce polyethylene sheets for insulation. 

Hungary's trade with developing countries totaled about US$1 .4 
billion in 1986 and represented a 7.3 percent share of its total trade, 
down from 9.5 percent in 1980. Exports to the developing world 
consisted of machinery, vehicles, industrial consumer goods, and 
agricultural goods. Hungary imported from the developing coun- 
tries tropical foods and other agricultural products, petroleum oil, 
clothing, carpets, electrical appliances, and steel products. In 1985 
Hungary joined the International Finance Corporation and the In- 
ternational Development Association, both of which are World Bank 
affiliates. 

Finally, trade with China rose dramatically from about US$1 12.7 
million in 1984 to US$343.9 million in 1986. However, China ac- 
counted for less than 2 percent of Hungary's trade in 1986. 

Domestic Consumption 

Hungary's domestic trade sector differed significantly from the 
cumbersome rationing system that existed in most centrally planned 
economies. And since Hungary began implementing economic re- 
forms, the production sectors of the economy funneled through the 
trade sector a far better supply and variety of goods and services 
than Hungarians had enjoyed earlier. By the late 1980s, Hungary's 
economy had largely overcome the supply shortages that tormented 
both producers and consumers in countries with command econo- 
mies. Still, many Hungarians lived at or below the officially recog- 
nized poverty level (see Social Relations in the 1980s, ch. 2). 

Domestic Trade Sector 

The domestic trade sector consisted of state- and cooperative- 
owned wholesale and retail enterprises and privately owned stores 
and restaurants. The Ministry of Trade oversaw the state-owned 
trade enterprises, and all state and cooperative commercial enter- 
prises could engage in both wholesale and retail trade. Private mer- 
chants were not required to purchase goods from the wholesale 
dealers, but they were barred from functioning as wholesalers them- 
selves. In 1986 Hungary had 17,222 state retail stores, 20,163 
cooperative ones, and 22,230 private ones. Private contractors 



155 



Hungary: A Country Study 



managed about 12 percent of the total number of state and 
cooperative-owned shops. About 75 percent of the 445,000 people 
working in the trade sector were women. Wages in the sector were 
10 percent lower than the national average, which may account 
for the fact that the sector had high employee turnover. In 1985 
Hungary had 102 shops that sold imported goods for foreign cur- 
rency with annual sales topping US$20 million. 

The largest retail trade enterprise in Hungary was the Skala- 
Coop chain, which several cooperative associations founded in 1974. 
Skala-Coop began purchasing goods directly from manufacturers 
and used modern marketing techniques, flashy advertising, an 
aggressive expansion policy, and consumer credit to capture about 
13 percent of the country's entire trade by 1986. The chain also 
became the first large trade enterprise to gain direct foreign-trade 
rights. 

Standard of Living 

In 1989 the supply and selection of food and other consumer 
goods in Hungary exceeded those in most other East European 
countries, and Hungarians as a whole suffered nothing similar to 
the hardship that the Romanians and Bulgarians endured in the 
1980s as a result of government-ordered energy cutbacks. In 1986 
Hungary's per capita meat consumption was the highest in Eastern 
Europe, while its egg consumption ranked among the highest. 
Per capita consumption of meat, fish, milk and dairy products, 
eggs, vegetables, potatoes, coffee, wine, beer, and hard liquor all 
increased significantly between 1950 and 1984. In 1960 the majority 
of households had both a bicycle and a radio, 20 percent owned 
a washing machine, and a few even possessed a television, a refriger- 
ator, or an automobile. By 1984, 96 out of 100 households owned 
a washing machine, every household owned a refrigerator, and the 
ratio of television sets to households was 108 to 100. The quality 
and variety of durable consumer goods on sale had also improved. 
As in other societies, purchase of luxury items was the prerogative 
of higher-income groups. For example, in the late 1980s automo- 
biles were owned mostly by upper- and middle-income households. 
As of 1984, only 34 out of 100 households owned an automobile. 

In 1986 the total disposable income of all Hungarians was the 
equivalent of US$17.2 billion. Hungarians spent 88 percent of that 
income, saved 6.2 percent, and invested 5.8 percent in building 
their own housing. Foodstuffs accounted for 27.1 percent of per- 
sonal spending; services, 26.6 percent; beverages and tobacco, 14.6 
percent; other consumer goods, 11.6 percent; clothing, 8.2 percent; 



156 



Vdci utca, main shopping district, Budapest 
Courtesy Scott Edelman 



durable goods, 7.9 percent; and heating and energy, 4 percent. 
The state paid the cost of medical and other social services (see 
Health, ch. 2). 

Official Hungarian sources reported that the average per capita 
monthly wage was 6,000 forints in 1988, about 14 percent above 
the officially recognized poverty level of 5,200 forints (US$84). 
Economists estimated that between 25 and 40 percent of the peo- 
ple lived below the poverty level. 

Economic Policy and Performance, 1945-85 

After 1949 Hungary's communist government under Matyas 
Rakosi applied the Soviet model for economic development (see 
Postwar Hungary, ch. 1). The government used coercion and bru- 
tality to collectivize agriculture, and it squeezed profits from the 
country's farms to finance rapid expansion of heavy industry, which 
attracted more than 90 percent of total industrial investment. At 
first Hungary concentrated on producing primarily the same as- 
sortment of goods it had produced before the war, including locomo- 
tives and railroad cars. Despite its poor resource base and its 
favorable opportunities to specialize in other forms of production, 
Hungary developed new heavy industry in order to bolster further 



157 



Hungary: A Country Study 

domestic growth and produce exports to pay for raw-material 
imports (see table 14, Appendix). The Soviet Union became Hun- 
gary's principal trade partner, supplying crude oil, iron ore, and 
much of the capital for Hungary's iron and steel industry. Heavy 
Soviet demand also led Hungary to develop shipbuilding and tex- 
tile industries. Trade with the West declined considerably. Soviet 
pressure, a Western trade embargo, and Hungarian policies favor- 
ing domestic and regional autarky combined to reduce the flow 
of goods between Hungary and the West to a trickle during the 
Cold War period. 

Rakosi's regime also established wage controls and a two-tier 
price system made up of producer and consumer prices, which the 
government controlled separately. In the early 1950s, the authori- 
ties used these new controls to limit domestic demand and cut rela- 
tive labor costs by tripling consumer prices and holding back wages. 
Popular dissatisfaction mounted as the economy suffered from 
material shortages, export difficulties, and mounting foreign debt. 
Agricultural growth also stagnated, and the area of cultivated land 
actually decreased. 

During the thaw after Soviet dictator Joseph Stalin died in 1953, 
Imre Nagy became Hungary's prime minister and, following the 
Soviet example, implemented an economic policy known as the 
New Course. Nagy's administration halted the collectivization 
drive, allowed farmers to leave collective farms, abolished com- 
pulsory production quotas, raised procurement prices for farm 
products, and increased investment in agriculture. Nagy also shifted 
investment from heavy industry to consumer-goods production. 
The economic system itself, however, remained unchanged, and 
plan fulfillment actually worsened after 1953. 

Hard-line party members soon undermined Nagy, and Rakosi 
regained control in 1955. The collectivization drive began anew, 
and the government redirected investment back to heavy industry 
before the cataclysmic Revolution of 1956 brought the country's 
economy to a standstill. According to official statistics, the econ- 
omy registered an 11-percent negative growth in 1956. After the 
revolution, Janos Kadar and others in the new leadership under- 
stood that they had to gear their economic policies toward improving 
the population's living standard, and they recognized that practi- 
cal considerations had to temper their commitment to the tenets 
of Marxism-Leninism as defined by the Soviet Union. From 1957 
to 1960, consumption grew more rapidly than national income as 
the government tried to assuage popular discontent. Per capita real 
income was 54 percent higher in 1960 than it had been in 1950. 

In 1959 the Kadar government began a second major collectivi- 
zation drive. Instead of using coercion, however, the government 



158 



Shops in Zalaegerszeg 
Courtesy John Tarafas 



offered peasants incentives to join cooperative or collective farms. 
The campaign ended in 1962 after more than 95 percent of agricul- 
tural land had come under the socialist sector's control. During 
the 1960s and 1970s, the Hungarian government made significant 
investments in agriculture and raised farm prices in an effort to 
make the sector viable. Agricultural mechanization also expanded 
by 50 percent. 

During the 1960s, the government gave high priority to expand- 
ing the industrial sector's engineering and chemical branches. 
Production of buses, machine tools, precision instruments, and 
telecommunications equipment received the most attention in the 
engineering sector. The chemical sector focused on artificial- 
fertilizer, plastic, and synthetic-fiber production. The Hungarian 
and Comecon markets were the government's primary targets, and 
the policies resulted in increased imports of energy, raw materials, 
and semifinished goods. 

By the mid-1960s, the government realized that the policy for 
industrial expansion it had followed since 1949 was no longer via- 
ble. Although the economy was growing steadily and the popula- 
tion's living standard was improving, key factors limited further 
growth. Returns from mining were diminishing, and Hungary had 



159 



Hungary: A Country Study 

exhausted previously untapped manpower reserves. The govern- 
ment recognized that the efficiency of Hungary's industries lagged 
well behind that of Western industries and that its communica- 
tion and transportation infrastructures were so inadequate that they 
retarded further economic growth. The Comecon countries were 
unable to supply Hungary with sufficient energy, raw materials, 
and technology to achieve further growth, and Hungary's leaders 
realized that the country would have to seek these critical inputs 
from the West. The government introduced the NEM in 1968 in 
order to improve enterprise efficiency and make its goods more 
competitive on world markets. 

From 1968 to 1972, the NEM and a favorable economic environ- 
ment contributed to good economic performance. The economy 
grew steadily, neither unemployment nor inflation was apparent; 
and the country's convertible-currency balance of payments was 
in equilibrium as exports to Western markets grew more rapidly 
than its imports. Cooperative farms and factories rapidly increased 
production of goods and services that were lacking before the re- 
form. By about 1970, Hungary had reached the status of a medium- 
developed country. Its industry was producing 40 to 50 percent 
of the gross domestic product, while agriculture was contributing 
less than 20 percent. 

In 1973 and 1974, in the midst of the Fourth Five- Year Plan 
(1971-75) world oil prices skyrocketed. Hungary's terms of trade, 
that is, the ratio of the prices Hungary received for its exports to 
the prices it had to pay for its imports, deteriorated considerably. 
The leadership responded to the new conditions with several major 
policy errors, which reversed the changes that had taken place under 
NEM. First, policy makers assumed world oil prices would soon 
return to earlier levels and concluded that the economy could be 
shielded from the capitalist world's crisis. The government did this 
shielding by subsidizing enterprises hard hit by rising energy costs 
and taxing the profits of enterprises that benefited from the high 
world prices. Second, the authorities chose to accelerate economic 
growth to deal with Hungary's deteriorating terms of trade. The 
Fifth Five- Year Plan (1976-80) emphasized industrial expansion 
and modernization and provided for a significant increase in invest- 
ment. The share of gross investment in the gross domestic product 
climbed from 34 percent in 1970 to 41 percent in 1978. Third, the 
government used pre- 1974 price and demand figures to justify 
launching major projects that the economy at that time could not 
carry out efficiently. Finally, planners earmarked significant invest- 
ment resources to increase the country's capacity to produce energy, 
basic materials, and simple semifinished goods in order to meet 



160 



The Economy 



domestic demand and increase exports to the Comecon markets. 
However, Hungary's investments did not spawn a modern manu- 
facturing capacity, which is the kind of industrial capacity needed 
to produce output for sale on the convertible-currency market. 

Decision makers discovered to their chagrin that they could not 
protect the economy from the world price increases. Because the 
economy depended on energy and raw-material imports, acceler- 
ated economic growth required increased imports of raw materi- 
als and energy that Hungary could not obtain from the Comecon 
countries. Thus, Hungary had to turn to the convertible-currency 
market to obtain a greater proportion of its inputs. In the 1970s, 
Hungary's spending on consumption and investment outstripped 
what its economy produced by an annual average of 2.2 percent; 
in 1978 alone it spent 5 percent more. The export earnings did 
not cover the cost of imports, convertible-currency trade deficits 
quickly piled up, and the government used foreign credits to finance 
the deficits. In addition, the government's efforts to shield the coun- 
try's enterprises from Western price increases backfired as Hun- 
gary's structure of production and investment never adjusted to 
world demand. Antireform politicians and managers of large en- 
terprises won partial reinstatement of the command economy by 
the mid-1970s. This recentralization exacerbated Hungary's eco- 
nomic woes by further isolating Hungary's enterprises from mar- 
ket forces and prompting managers to show inadequate concern 
for efficiency, waste, and the competitiveness of their products on 
world markets. 

Hungary's economic policy makers realized by 1978 that if the 
economy continued to run trade deficits, the country would soon 
be unable to honor its debt obligations. In 1978 the HSWP de- 
cided to revive the NEM. A year later, the government imple- 
mented a stabilization program aimed at, among other things, 
redirecting the economy away from heavy industry, improving the 
convertible-currency trade balance, and shrinking the country's 
foreign debt. The program's architects planned to maintain cur- 
rent levels of material consumption for several years in order to 
maximize convertible-currency exports; at the same time, they 
planned to cut spending by reducing investment. 

New external shock waves rocked the economy in the late 1970s, 
further eroding Hungary's terms of trade and undercutting the 
country's creditworthiness despite the reduction in investment. Oil 
prices rose dramatically and precipitated a world recession. Soon 
interest rates rose, and Western banks reduced the flow of credits 
to the East European countries in 1982 as a result of Poland's debt 



161 



Hungary: A Country Study 

moratorium, Romania's insolvency, and the economic sanctions 
levied by the United States against Poland after the declaration 
of martial law in December 1981. The interest-rate increases helped 
to increase Hungary's hard-currency debt (see table 15, Appen- 
dix). Before the rates rose, Hungary relied heavily on floating-rate, 
short-term loans whose maturities were poorly staggered. In 1981 
more than 80 percent of Hungary's US$8.7 billion convertible- 
currency debt was due within five years, and debt-servicing costs 
consumed about 33 percent of Hungary's convertible-currency 
earnings. In 1982 a liquidity crisis in Hungary shook the confi- 
dence of Western bankers, and for several months the country was 
unable to negotiate new credits from the West. 

Eager to avoid debt rescheduling, Hungary joined the IMF and 
the World Bank in 1982 and received from them about US$2 bil- 
lion in loans. In addition, Hungary introduced a stricter stabiliza- 
tion program and obtained bridge financing from the Bank for 
International Settlements. The leadership also renewed its support 
for economic reforms, which creditors viewed as a positive step 
toward more efficient use of resources and improvement of the coun- 
try' s balance of payments. 

Under the new stabilization program, spending on investment 
and consumption, which had outstripped the amount the economy 
had produced by 6.9 percent from 1974 to 1978, fell to 1 percent 
less than production from 1979 to 1983. By 1985 Hungary had 
slashed its investment spending to about US$5.2 billion, 21.8 per- 
cent less than in 1981. The government also increased prices steeply. 
Hungary's Sixth Five-Year Plan (1981-85) called for greater auster- 
ity, efficiency, and profitability, and it forecast growth of 14 per- 
cent to 17 percent over the previous plan period. The economy, 
however, grew by only 7 percent. Industrial production rose only 
12 percent, far below the planned growth of 19 to 22 percent. 
Agricultural output rose 12 percent over the previous plan period, 
while the Hungarians' real per capita income increased 7 to 8 per- 
cent. Planners targeted exports to increase by 37 to 39 percent and 
imports by 18 to 19 percent; exports, however, rose only 27 per- 
cent, while imports increased merely 6 percent. 

The Seventh Five-Year Plan, 1986-90 

In the Seventh Five-Year Plan period (1986-90), the leadership 
expected the economy to supply consumers with a greater assort- 
ment of foodstuffs, to improve the country's balance of payments 
by raising exports, and to increase productivity and profitability. 
Planners called for the net material product to grow by 15 to 17 
percent over the 1985 level. The plan also called for industrial 



162 



The Economy 



production to rise by 14 to 16 percent over the 1981-85 plan period; 
agricultural output to rise 7 to 10 percent; domestic consumption, 
13 to 16 percent; real per capita income, 9 to 1 1 percent; and both 
imports and exports, 16 to 18 percent. 

In 1986 Hungary's national income grew by only 0.5 percent, 
far short of the planned 2.3 to 2.7 percent. Both industrial produc- 
tion, which rose 1.8 percent, and agricultural production, which 
increased 1 percent, were far short of planned levels. At the same 
time, domestic consumption jumped 3 percent, consumer prices 
increased 5.3 percent, and per capita real income rose 0.7 percent. 
Investment grew by 5.1 percent, the maximum envisaged in the 
plan. Compared with the previous year, Hungary's imports in 1986 
rose by 2.5 percent, while exports fell by 2 percent. 

In 1987 national income grew as planned by about 2 percent. 
Industrial production rose by 3.7 percent, higher than the planned 
2 to 2.5 percent, but bad weather caused agricultural output to 
fall far short of the 1986-90 plan target. In 1987 investment grew 
by 6 percent, approximately six times the planned amount, while 
per capita income remained at the 1986 level. The government in- 
creased prices on energy and foodstuffs sharply in 1987 and in- 
creased prices on 53 percent of the items sold in the country in 
January 1988. The consumer price index for the first eight months 
of 1988 was 16 percent higher than for the same period in 1987, 
while the official inflation rate was 17.7 percent. The government 
also devalued the forint an average of 13 percent against Western 
currencies in 1987. 

Hungary has enjoyed favorable treatment from international cap- 
ital markets despite disappointing growth and continued deterio- 
ration in external accounts. At least one author has pointed out 
that Western banks have shown the greatest confidence in coun- 
tries such as Hungary that have good debt- servicing records, regard- 
less of the countries' economic problems. In the latter half of the 
1980s, Japanese banks increased their loan portfolio and sought 
to make low-risk loans to East European countries, particularly 
Hungary. Hungary took on loans to restructure its industry, reno- 
vate power stations, implement its energy rationalization program, 
upgrade its telecommunications system, and finance foreign trade. 

The current value of Hungarian exports declined between 1984 
and 1986, and the country ran a US$548 million trade deficit in 
1986 followed by a US$390 million deficit in 1987. As a result of 
a deteriorating convertible-currency current account, Hungary's 
debt more than doubled in two years from US$8.6 billion in 1985 
to US$18 billion in December 1987, and the country's ratio of debt 
to convertible-currency exports reached 338 percent by 1986. In 



163 



Hungary: A Country Study 

May 1988, the government signed a US$350 million standby credit 
agreement with the IMF and announced strict austerity measures. 
In the first nine months of 1988, Hungary's convertible-currency 
trade netted a US$200 million surplus, rebounding from the 
US$470 million deficit it showed in the same period in 1987. The 
surplus marked the first time since 1981 that Hungary's foreign 
trade with developed countries was balanced. 

In 1989 the government sought to achieve large trade surpluses 
with convertible-currency markets that would enable the country 
to repay its foreign debt and import raw materials and technology. 
Hungary could create those surpluses only by importing more raw 
materials or using existing resources more efficiently. Hungary's 
major supplier, the Soviet Union, was experiencing shortfalls in 
oil and other raw-materials production that were forcing it to slow 
and even reduce exports. Thus, Hungary again was forced to turn 
to convertible-currency markets to secure additional raw materials. 
Because neither Hungary nor the Comecon countries generally had 
the technology and know-how that were necessary to improve effi- 
ciency and increase the output of products marketable in the West, 
Hungary also had to turn to the West for technology. The leader- 
ship understood that realizing the benefits of economic relations 
with the West required significant further improvement of the eco- 
nomic system. At the Thirteenth Party Congress in March 1985, 
the leadership reaffirmed its commitment to continue economic re- 
forms that promised to improve efficiency and enhance the com- 
petitiveness of Hungary's exports. In the last years of the Kadar 
era, the government had enacted many such reform measures, but 
the implementation and enforcement of these measures were un- 
even. With the emergence of a new leadership under Karoly Grosz 
in 1988, Hungary appeared poised to enact and implement more 
dramatic reforms, including political changes, that could radically 
alter the country's economic life in the 1990s. 

Hungary's economic reforms proceeded so rapidly in the 1980s 
that works on the country's economic system have become out- 
dated shortly after appearing in print. The most comprehen- 
sive description of Hungary's economic reforms available is Paul 
Marer's "Economic Reform in Hungary" in East European Econo- 
mies: Slow Growth in the 1980s, a publication of the United States 
Congress. Marer's East-West Technology Transfer: Study of Hungary 
also examines Hungary's economic reforms and provides detailed 
analyses of Hungary's major economic sectors and its trade with 



164 



The Economy 



the Comecon countries and the West. Janos Kornai's article "The 
Hungarian Reform Process: Visions, Hopes, and Reality" pro- 
vides a sober assessment of the reforms by a leading Hungarian 
economist. Also interesting are Paul Hare's "Industrial Develop- 
ment of Hungary since World War II" and "The Beginnings of 
Institutional Reform in Hungary." (For further information and 
complete citations, see Bibliography.) 



165 



Chapter 4. Government and Politics 




V 




A small-town judge, 1916 



THE POLITICAL SYSTEM of the Hungarian People's Repub- 
lic, like others in Eastern Europe, drew heavily upon a model first 
established in the Soviet Union. The leading political institution 
in the state was the ruling communist party, in this case the Hun- 
garian Socialist Workers' Party. This monolithic, centralized party 
determined the basic economic, political, and social policies for the 
country as a whole, and the government implemented the party's 
decisions. 

The Constitution, ratified in 1949 and amended considerably 
in 1972, grants political and economic rights to the people, 
prescribes civic duties, and establishes the institutions of govern- 
ment. According to the Constitution, the National Assembly (the 
parliament) holds supreme authority in the state. In fact, the 
Presidential Council, a standing body of the National Assembly 
that combined legislative and executive functions, assumed most 
of the duties of the National Assembly and those of a chief of state. 
The National Assembly, however, did provide a vehicle for ex- 
panded political participation. A 1983 amendment to the Consti- 
tution mandated multicandidate elections for most seats in the 
National Assembly. The Council of Ministers — the executive arm 
of the government — had primary responsibility for the economy. 
Within the party, the rank-and-file members had virtually no in- 
fluence over decision making. The permanent party bureaucracy, 
headed by the Politburo and administered by the Secretariat, ex- 
ercised supreme power within the party. These organs made pol- 
icy for the party, enforced discipline, and regulated admissions. 
Middle-level organs managed policy on the county and district 
levels. Basic Organizations — on the lowest rung of the party 
hierarchy — carried out party activities in economic enterprises. The 
Patriotic People's Front served under the auspices of the party; 
this mass organization involved the citizenry in carrying out deci- 
sions made by the party. The mass media also served as instru- 
ments to generate popular support for the party's policies. 

In May 1988, Karoly Grosz succeeded Janos Kadar as general 
secretary of the party. Kadar had been leader of the party since 
the Soviet invasion of 1956. Mounting economic problems and 
general dissatisfaction with the pace of political reform led to the 
ouster of Kadar at the party's Third Party Conference. 

Hungary's foreign policy positions generally coincided with those 
of the Soviet Union. Since 1986 these countries have supported 



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Hungary: A Country Study 

each other's reform efforts. Nevertheless, Hungary displeased the 
Soviet Union with its efforts to establish an independent role for 
small- and medium-sized states in international affairs and to ob- 
tain Western economic assistance to help modernize its economy. 
Discord also emerged between Hungary and Romania — ostensibly 
another fraternal ally — over the latter 's oppression of its Hungar- 
ian minority. 

Constitutional Development 

The theoretical foundations of Marxist-Leninist constitutions 
differ from those underlying Western, democratic constitutions. 
The latter are fundamentally prescriptive: they define a set of po- 
litical relations between government and people that ought to exist. 
By contrast, Marxist-Leninist constitutions attempt to reflect reality 
by describing an existing set of political relationships. As these po- 
litical relationships evolve over time, the regime alters the consti- 
tution to reflect these changes. The Hungarian Constitution serves 
several political purposes. It attempts to mobilize the populace in 
support of the regime's goals. The Preamble of the Constitution 
formally calls upon the people to promote the construction of so- 
cialism and communism. In addition, the Constitution demands 
that the most loyal sections of the population advance the regime's 
goals through greater efforts and initiative. The Preamble also offers 
justifications for the regime's existence by describing the histori- 
cal past that led to Marxist- Leninist rule. 

The Constitution does, however, bear some similarity to demo- 
cratic constitutions. Like Western constitutions, the Hungarian Con- 
stitution establishes the rights and duties of the citizenry, although 
it devotes more attention to the latter than democratic constitutions. 
In addition, the Constitution specifies the institutions of government 
and the relations among them. It is, however, much more detailed 
in this regard than most democratic constitutions. 

The Constitutional Law Council, formed in 1983, had some 
power to enforce observance of constitutional principles. The coun- 
cil, a fifteen-member body subordinate to the National Assembly, 
monitored decrees, laws, and resolutions issued by government bod- 
ies to ensure their conformity with the Constitution. 

Constitution of 1949 

In June 1948, the Hungarian Workers' Party (on November 1, 
1956, renamed the Hungarian Socialist Workers' Party — HSWP) 
sought to legitimate the fundamental changes that had taken place 
in the state, the economy, and the society and directed the govern- 
ment's Council of Ministers to begin work on a constitution. The 



170 



Government and Politics 



Council of Ministers formed a Drafting Committee, which sub- 
mitted a proposed Constitution on August 5, 1949. The National 
Assembly ratified the Constitution on August 20, 1949, thus mak- 
ing a new national holiday that coincided with the traditional holi- 
day of the feast of Saint Stephen. 

The regime modeled its Constitution on the 1936 "Stalin" con- 
stitution of the Soviet Union. As of the late 1980s, its basic fea- 
tures remained in effect, although the regime added important 
amendments in 1950, 1953, 1954, 1972 and 1983. The 1949 Con- 
stitution contained a sociopolitical program dictated by the Soviet 
Union and listed the achievements of Hungary's "people's 
democracy" (see Rakosi's Rule, ch. 1). The government, with its 
ministerial system, collective presidency, and powerless legislature, 
resembled the Soviet system of the Stalinist period. The Constitu- 
tion also created the local council system and new kinds of judicial 
institutions, and it laid the groundwork for the country's system 
of public prosecutors (see State Apparatus, this ch.). Only Chap- 
ter IX, which described the national flag and coat of arms, had 
a specifically Hungarian character. 

Amendments of 1972 

To keep pace with the changes that had taken place in Hungary 
since Kadar became first secretary of the HSWP in 1956, the re- 
gime changed every chapter of the Constitution in 1972. Accord- 
ing to Hungarian political scientist Istvan Kovacs, the 1972 
amendments "brought into harmony the wording of the Consti- 
tution and the socialist transformation of the country between 1 949 
and 1972." Thus, the Constitution describes the achievements of 
the Kadar regime. It also provides a constitutional basis for the 
regime's efforts to gain the allegiance of all Hungarians by replac- 
ing the term workers, the only group that the 1949 Constitution en- 
titled to full civil rights, with the term citizens. The changes in 1972 
signaled a break with Hungary's Stalinist past and the beginning 
of a new, more benevolent phase in regime-society relations. 

The Constitution, as amended in 1972, plays several important 
roles in Hungarian political life. Most important, the Constitu- 
tion provides justifications for the emergence and development of 
the regime itself, a,s well as for the political forces that shaped its 
character. The Preamble refers to the Marxist- Leninist regime as 
the product of more than 1 ,000 years of Hungarian history, thereby 
linking it with Hungarian tradition. It also draws on the heritage 
of the Hungarian Soviet Republic of 1919, thus attempting to cre- 
ate a socialist state tradition in Hungary and link itself to that tra- 
dition (see Political and Economic Life, 1905-19, ch. 1). 



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Hungary: A Country Study 



In justifying the regime, the Constitution attempts to establish 
the legitimacy of the political system. The Constitution defines the 
Hungarian People's Republic as a socialist state in which all power 
belongs to the working people. It labels the Patriotic People's Front 
(PPF) as a movement uniting all social groups for the resolution 
of political, economic, and cultural problems. Chapter I, Article 
15, establishes the orientation of Hungary's foreign policy by stat- 
ing that the country forms part of the world socialist system and 
seeks to develop its friendship with other socialist states. Finally, 
Chapter IX of the Constitution defines visual symbols for the Hun- 
garian People's Republic by describing the coat of arms and the 
flag of the state and by locating the country's capital in Budapest. 

In establishing the country's political system, the Constitution 
fixes the HSWP as the leading force in society. Although the Con- 
stitution does not formally proscribe other political parties, neither 
does it provide for their existence. On November 10, 1988, however, 
the Council of Ministers took the first in a series of steps required 
to legalize the existence of other parties when it approved draft laws 
on the rights of assembly and association. The National Assembly 
approved these new laws on January 11, 1989. According to the 
new laws, county courts were to register these associations and could 
not refuse to register them if they met the law's requirements. Thus, 
private individuals, legal entities, and unofficial groups could set 
up political parties if their programs observed the law. A separate 
statute was to deal with matters such as registration, supervision, 
and dissolution of the parties. A new constitution, which was to 
be ready for ratification in 1990, would determine the role and status 
of political parties other than the HSWP in society. Taking ad- 
vantage of this change in the political atmosphere, other political 
parties, which had been disbanded in the late 1940s, began to re- 
emerge in the late 1980s. For example, the Independent Small- 
holders' Party announced it would resume its activities. The Social 
Democratic Party and the National Peasant Party also began to 
reorganize (see Coalition Government and Communist Takeover, 
ch. 1). 

Having provided several kinds of justifications for the regime's 
existence, the Constitution proceeds to establish the institutions of 
government. The Constitution delineates the powers of the Na- 
tional Assembly, the Presidential Council, the Council of Ministers, 
and the local councils. The Constitution establishes a judicial 
system made up of the Supreme Court and a series of lower courts. 
The Constitution requires the National Assembly to elect a prose- 
cutor general, who in turn appoints prosecutors at local levels. 



172 



Government and Politics 



Like constitutions in the West, the Hungarian Constitution 
describes civic and political rights. These rights include the guaran- 
tees of equality before the law and the personal freedom and in- 
violability of the citizenry; liberty of conscience and freedom of 
worship; freedom of speech, press, and assembly; right of associa- 
tion; and privacy of correspondence and the home. In line with 
the Marxist-Leninist ideology of the regime, the Constitution also 
guarantees certain social and economic rights, including the right 
to leisure time; the right to financial support for old age, disease, 
and disability; and the right to education. 

The Constitution, however, limits citizens' exercise of their po- 
litical rights. According to Chapter VII, Article 64, the Constitu- 
tion guarantees the rights of speech, press, and assembly "in a 
manner conforming to the interests of socialism and the people." 
This clause allows the government to ban any activities it considers 
detrimental to its interests. Equally important, Chapter VII, Ar- 
ticle 69, states that the "fundamental duty" of the citizenry is to 
"protect the property of the people, to consolidate social owner- 
ship, to increase the economic strength of the Hungarian People's 
Republic ... to consolidate the order of society." Although in 1988 
the United States Department of State found that Hungarians en- 
joyed relatively more liberties than their counterparts in other coun- 
tries of Eastern Europe, duties to the state continued to take 
precedence over rights contained in the Constitution. The regime 
did not treat as inalienable the rights held by the people. 

Furthermore, socioeconomic rights contained in the Constitu- 
tion have acted not only as an economic safety net but also as a 
source of oppression for the people. For example, the right to work 
not only guaranteed employment but also allowed the regime to 
enforce compulsory employment for all adult males and all single 
females because the regime could best exercise power over the 
populace while they were at work. The right to leisure time allowed 
the regime to control the forms of entertainment that citizens could 
enjoy. And the right to primary and secondary education has meant 
little more than the obligation to listen to regime- sponsored efforts 
at political indoctrination. 

Constitutional Law Council 

In 1989 the Constitutional Law Council had the power to moni- 
tor constitutional life in Hungary, note possible violations of the 
Constitution, and initiate procedures to eliminate laws, decrees, 
and regulations that failed to conform to the Constitution. The 
National Assembly elected the fifteen members of the Constitu- 
tional Law Council, which included National Assembly delegates, 



173 



Hungary: A Country Study 



the minister of justice, the president of the Supreme Court, the 
prosecutor general, and the chairman of the People's Control Com- 
mittee (see State Apparatus, this ch.). The council was subordinate 
to the National Assembly and, unlike the United States Supreme 
Court, was not an independent body for judicial review. 

In amending the Constitution to establish the Constitutional Law 
Council in 1983, the regime responded to demands of the public 
to promote the rule of law and to requests of constitutional law- 
yers to systematize laws, decrees, and regulations promulgated by 
the ministries. The council used reports of violations from "reli- 
able entities," which included government agencies, the National 
Assembly, and the county and district councils. If the Constitu- 
tional Law Council found that a law, decree, or regulation vio- 
lated the Constitution, the council mediated between the body that 
lodged the complaint and the government organ that issued the 
law, decree, or regulation. The council could suspend acts it deemed 
unconstitutional, but it could not repeal them. 

Individual citizens lacked direct access to the Constitutional Law 
Council. In fact, only government organs in a position to violate 
the Constitution — the National Assembly, the Presidential Coun- 
cil, the ministries, and the county and district councils — had the right 
to initiate inquiries by this body. If a person submitted a case to 
the Constitutional Law Council, the council referred that person 
to the government organ best able to represent the case. However, 
authorized organs represented only their own viewpoints, not those 
of individuals. Furthermore, no religious body had access to the coun- 
cil; therefore, issues concerning church- state relations never appeared 
for review. In effect, the Constitutional Law Council was answera- 
ble only to governing organs, not to the Hungarian people. 

State Apparatus 

The political system of Hungary bore some similarity to a 
parliamentary form of government. In principle, power in the 
government emanated from the National Assembly, which elected 
its own leadership — the Presidential Council and its chairman, who 
served as chief of state — and the Council of Ministers, which formed 
the government (see fig. 8). The state apparatus, however, was 
not the center of political power in Hungary. The government mere- 
ly executed policies designed by the HSWP. Within the govern- 
ment itself, power resided in the Council of Ministers and the 
Presidential Council. The National Assembly merely ratified de- 
cisions made elsewhere. 

Government life centered on the Council of Ministers. The re- 
gime established the Council of Ministers in the immediate postwar 



174 



Government and Politics 



period using the Soviet Council of Ministers as a model. The 
primary function of the Council of Ministers was to administer the 
economy. It also had the power to pass some legislation; the minis- 
tries could make laws in their own jurisdictions. 

The Presidential Council — the collective chief of state — was mod- 
eled after the Soviet Union's Presidium of the Supreme Soviet. 
The council, headed by its chairman, combined legislative and ex- 
ecutive functions. In fact, the Presidential Council passed most of 
the country's legislation. 

The HSWP effectively exercised control over the government. 
In 1989 all members of the Council of Ministers and most mem- 
bers of the Presidential Council were party members and served 
on such party bodies as the Central Committee and the Politburo 
(see Party Structure, this ch.). As party leaders, government offi- 
cials formulated economic, political, and social policies. These offi- 
cials were subject to the norms of democratic centralism, which 
required them to carry out the directives of the HSWP or face party 
discipline (see Democratic Centralism, this ch.). Equally impor- 
tant, the party exercised control over these governmental institu- 
tions through its power of nomenklatura (see Glossary), a list of party 
and government positions for which the party had power to make 
appointments. The HSWP's Basic Organizations ensured that the 
staff of each ministry adhered to party policies on a day-to-day basis. 

In the 1980s, the regime opened up the political system to a greater 
degree of popular participation. Although multicandidate elections 
had been permitted since the late 1960s, a 1983 amendment to the 
Constitution made mandatory the multicandidate elections for the 
National Assembly and the local councils. However, these elections 
took place under the auspices of the PPF, which guaranteed that 
candidates accepted its program. A national list of candidates to the 
National Assembly, who ran unopposed, did ensure the election of 
party and government luminaries, as well as of other figures of na- 
tional importance. Nevertheless, in the 1985 elections many indepen- 
dent candidates, who were not among the PPF's original slate of 
nominees, succeeded in gaining seats in the National Assembly and 
the local councils. Significantly, although the regime structured the 
elections to favor its candidates, until mid- 1989 the Hungarian elec- 
toral system was the most democratic in Eastern Europe. 

The local councils had very little power. Ironically, their chief 
importance lay in administering those services, such as education, 
housing, and food supply, that had the greatest impact on peo- 
ple's lives. 

Like other Marxist-Leninist regimes in the late 1980s, Hungary 
lacked an independent judiciary. The Supreme Court, together with 



175 



Hungary: A Country Study 




176 



Government and Politics 



a system of lower courts at the county and district levels, had few 
duties and little power. The prosecutor general and his subordinates 
at the local levels represented the state in prosecuting persons ac- 
cused of a crime. However, the law also obligated these officials 
to protect the rights of the citizenry and ensure a fair trial for the 
accused. 

Council of Ministers 

According to the Constitution, the Council of Ministers guided, 
influenced, and controlled the entire construction of the economic, 
political, and social system of socialism. The council had primary 
authority over economic decision making; it developed and im- 
plemented the regime's economic plans. Beginning in 1968 with the 
introduction of the New Economic Mechanism (NEM), an effort 
to relax central controls over the economy, the Council of Ministers 
played a particularly critical role within the political system (see Eco- 
nomic Policy and Performance 1945-85, ch. 3). 

In 1989 the Council of Ministers consisted of a chairman (the 
prime minister), two deputy prime ministers, twelve ministers, the 
chairman of the National Planning Authority, the chairman of the 
People's Control Committee, and the chairman of the State Plan- 
ning Committee. The number of ministries has varied over time. 
In 1989 they included agriculture and food, culture and education, 
defense, environmental protection and water management, finance, 
foreign affairs, health and social affairs, industry, internal affairs, 
justice, communications, construction, and trade. Other agencies 
also operated under the auspices of the Council of Ministers and 
in 1989 included the Central Statistical Office, the Hungarian Na- 
tional Bank, the National Price Office, the State Office for Church 
Affairs, the State Office for Youth and Sports, the Postal Service, 
and the State Wage and Labor Office. 

Although the Council of Ministers devoted primary attention to 
the economy, according to the Constitution its first responsibility 
was to "safeguard and guarantee the political and social order of 
the state and the rights of the citizens." In 1989 other duties in- 
cluded enforcing laws and decree-laws, supporting scientific and cul- 
tural development, establishing a system for social and health 
services, and concluding and approving international agreements. 
According to Chapter III, Article 34, of the Constitution, a special 
act of the National Assembly may assign other duties to the Coun- 
cil of Ministers in addition to those described in the Constitution. 

In 1989 ministers had no fixed term of office. Ministers served 
at the behest of the National Assembly and could, upon recom- 
mendation of the party, be recalled at any time. 



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Hungary: A Country Study 

Hungarian political scientist Mihaly Bihari has argued that the 
Council of Ministers and the ministerial system institutionalized 
society's economic interests and their representation within the 
government. The ministerial departments made the most impor- 
tant decisions on the economy because they had the requisite 
knowledge at their disposal as a result of their day-to-day adminis- 
tration of issues under their jurisdiction. Although the National 
Assembly and, most often, the Presidential Council issued laws, 
regulations, and decrees, the ministries developed and selected the 
suggested proposals. Bargaining among ministries and within the 
Council of Ministers resolved policy differences on these proposals. 
All interested ministries had the opportunity to modify these 
proposals so that it was possible to discern the interests and politi- 
cal demands of the social groupings represented by each ministry. 

The People's Control Committee functioned under the direc- 
tion of the Council of Ministers. The committee supervised a hier- 
archy of similar committees at the local levels. The Presidential 
Council appointed members of the People's Control Committee, 
but volunteers staffed most of the positions at the local levels. The 
committees oversaw the operations of government organs, social 
organizations, and economic enterprises to ensure proper manage- 
ment and legality. 

Presidential Council 

In 1989 the Constitution described the Presidential Council as 
subordinate to the National Assembly and superordinate to the 
Council of Ministers. However, the Presidential Council was in 
fact the highest state organ and, because the National Assembly 
met so infrequentiy, it acted as an ersatz parliament. In early 1989, 
the chairman of the Presidential Council was Bruno F. Straub, at 
the time the only noncommunist chief of state in Eastern Europe. 

The Presidential Council had combined legislative and execu- 
tive powers. It set the date for elections to the National Assembly, 
convened the National Assembly, initiated legislation, and decreed 
national plebiscites. The Presidential Council also contributed to 
the normal functioning of state life by concluding and ratifying 
treaties, receiving the credentials of foreign ambassadors, electing 
professional judges, and conferring awards and titles. The Presiden- 
tial Council supervised the local councils by setting the date for 
council elections, ensuring the rights of the councils, and dissolv- 
ing those councils that infringed on the Constitution. When the 
National Assembly was not in session, the Presidential Council as- 
sumed the powers of a parliament. In fact, the Presidential Coun- 
cil performed most of the government's legislative work. (The 



178 



Government and Politics 

National Assembly usually approved the decree-laws of the Presi- 
dential Council at its next session.) In the event of war or threat 
to the security of the state, the Presidential Council could estab- 
lish a National Defense Council with extraordinary powers. 

In addition to these legislative and executive duties, the mem- 
bers of the Presidential Council undertook a number of other tasks. 
They participated in the committee work of the National Assem- 
bly (see National Assembly, this ch.), held meetings with consti- 
tuents, and handled complaints about the bureaucracy from the 
citizenry. Members could represent Hungary abroad and hold 
meetings with foreign delegations. They also visited county and 
district governments and participated in awards ceremonies. 

In 1989 the secretariat of the Presidential Council consisted of 
a division for justice, which handled pardons for criminals; a divi- 
sion for civil proceedings; a division for law; and a division for 
honors and decorations. These divisions had their own organi- 
zational statutes. The secretariat lacked a permanent organiza- 
tional structure because new divisions could be created according 
to need. 

In the late 1980s, the Presidential Council remained a rather 
secretive body. The media did not publish its discussions and de- 
bates. The Presidential Council also did not announce its voting 
procedures. 

In 1989 the Presidential Council consisted of a chairman, two 
deputy chairmen, a secretary, and seventeen members at large. 
The National Assembly elected these members from among its own 
delegates, although the Central Committee of the HSWP actually 
made the choices. Both party members and nonparty members 
could be selected for the Presidential Council — including its leader- 
ship positions — although party members generally predominated. 
Three rules seemed to have governed the Central Committee's 
selections: the council had to be a representative body mirroring 
the occupational and social structure of the population, it had to 
contain a number of well-known people in public life, and it had 
to include several party leaders. The Presidential Council thus was 
made up of party leaders, as well as representatives of social and 
political groups, including national minorities, peasants, and 
women. Church leaders who supported the regime also were 
selected. A few members were nominated because of their policy 
expertise in a given field. For example, because the secretary not 
only supervised the secretariat of the council but also helped to de- 
termine its political line and handle its day-to-day affairs, that official 
usually had had previous experience in the personnel administra- 
tion of the HSWP. 



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Hungary: A Country Study 

National Assembly 

The Constitution designates the National Assembly as the 
supreme organ of state power. In reality the parliament played a 
limited role in the government. Until 1989, the 352-member 
unicameral National Assembly met only three or four times a year 
in sessions that lasted no longer than four days each. In addition 
to electing the membership of state and government bodies nomi- 
nally subordinate to it, the National Assembly also enacted laws 
and approved the five-year economic plans. However, from 1980 
through 1985 the National Assembly passed only eighteen bills, 
an insignificant number compared with those passed by the 
Presidential Council and the Council of Ministers. In the late 1980s, 
party leaders openly acknowledged that these two bodies made all 
the important decisions and that the National Assembly was merely 
a rubber stamp. 

Delegates to the National Assembly did play several important 
roles. They contributed to the plenary discussions of the parlia- 
ment, acted as members of the county groups, served their consti- 
tuencies, and participated in the parliament's standing committees. 
Plenary sessions chiefly concerned local problems and were an at- 
tempt to use the parliament's publicity to pressure authorities on 
the distribution of funds. Delegates elected from each county formed 
county groups to promote the interests of their region. Because most 
counties had an urban-rural mix, formation of a common policy 
outlook was difficult. However, inasmuch as Hungary had more 
agricultural regions than industrial regions, agriculture enjoyed 
predominance. As servants of their constituencies, delegates 
reported on their activities in the National Assembly and attempted 
to resolve citizens' complaints against the bureaucracy. 

The most important duties of the delegates concerned their work 
on the standing committees of the National Assembly. The Na- 
tional Assembly elected in 1985, in addition to legal, administra- 
tive, and judicial committees, had standing committees for 
construction and transport, culture, industry, trade, foreign affairs, 
agriculture, social and health affairs, infrastructural development 
and environmental protection, and planning and budgeting. During 
the 1980-85 convocation of the National Assembly, 221 out of the 
352 delegates served on the standing committees, which met about 
50 times a year. The committees discussed draft laws submitted 
by the Council of Ministers, usually proposing only small changes 
in the text. The committees did, however, have the power to re- 
ject the drafts at this stage. In the 1980s, the committees also actively 
supervised the implementation of laws. A parliamentary presidency, 



180 



Government and Politics 



which consisted of the chairman and two deputy chairmen aided 
by a small bureau, coordinated the work of the committees. 

Elections to the National Assembly 

In 1983 the government instituted a new electoral system for the 
National Assembly and local councils to encourage more popular 
participation in governmental affairs. Before 1966 Hungary had 
used an electoral system in which a voter could vote only for or 
against the official slate of candidates. In 1966 the government in- 
itiated election procedures that made the nomination of more than 
one candidate possible; in the 1971 elections, 49 districts out of 
352 nominated two or more candidates. By 1981, however, the 
number of multicandidate districts declined to fifteen, thus caus- 
ing concern within the party leadership and eventually triggering 
reform. 

In 1983 the regime instituted a new electoral system for several 
reasons. British authority Bill Lomax has written that Hungarian 
leaders "felt sufficient confidence that by granting measured degrees 
of independence and autonomy to society, they could win not just 
the passivity but the complicity if not quite the loyalty of major 
sections of the population." Through its multicandidate elections, 
the regime attempted to convince the populace that the political 
system was essentially democratic. The electoral system afforded 
the government the opportunity to mobilize people in support of 
a political campaign and thereby increase their political awareness. 
Finally, the elections provided an occasion for testing the HSWP's 
organizational and supervisory abilities. 

The new rules compelled the nomination of several candidates 
in single-member districts. Both residents of the district and work- 
ers employed in the district but living elsewhere could participate 
in the nomination meetings. At the meetings, voters could ask ques- 
tions of the candidates and comment on their programs with sup- 
port or objections. The PPF organized the meetings and proposed 
the candidates. Nominations could also be submitted by other so- 
cial and political organizations or persons in the district. All candi- 
dates, however, had to accept the PPF program to be eligible for 
nomination. Thus the procedure favored regime candidates and 
minimized the chances for independent candidates. For a candidate 
to gain nomination, 33.3 percent of the persons present at the meet- 
ing had to cast a "yes" vote. If no candidate received the required 
percentage, another nomination meeting was held. In addition, the 
rules stipulated that the number of nomination meetings equal the 
number of candidates, but each parliamentary district had to have 
at least two candidates and therefore two meetings. All proposals 



181 





***** 

! 1 1 ?rr| Hj 




National Parliament building 
Courtesy Gustav Forster 



183 



Hungary: A Country Study 



for the nomination of independent candidates had to be resubmit- 
ted at the next meeting. The rules also allowed each citizen to vote 
for several nominees. Because the regime could use the PPF to 
mobilize large numbers of people against undesirable candidates, 
this rule discriminated against independent nominees. 

The efforts of the dissident Laszlo Rajk to gain nomination il- 
lustrate the barriers faced by independent nominees. On April 18, 
1985, at the first of the two required nomination meetings in the 
southern constituency of Budapest's fifth district, Rajk gained the 
support of about 40 percent of the 223 people present. At the sec- 
ond electoral meeting on April 22, the regime attempted to thwart 
Rajk's nomination. HSWP activists, plainclothes police, and fac- 
tory workers filled the hall. Rajk's speech raised such controver- 
sial issues as conscientious objection to military service, the fate 
of the environment, and the problem of Hungarian minorities 
abroad (see Relations with Other Communist Neighbors, this ch.). 
At the second meeting, only about 27 percent of the 1,388 voters 
present supported Rajk. 

In addition to the obligatory multiple candidacies, the new 
electoral system called for the establishment of a national list of 
thirty-five candidates to be elected without opposition. Politburo 
member Mihaly Korom justified the national list by arguing that 
"important interests demand the representation of leading perso- 
nalities" from society, culture, science, and the churches. Korom 
maintained that the "character of their work, the province of their 
activities go far beyond the boundaries of their electoral districts." 
The law was successful in promoting multiple candidacies through- 
out the country. In addition, some independent candidates gained 
nomination and election. Of the 352 National Assembly consti- 
tuencies in the 1985 election, 298 had two candidates each, 50 had 
three candidates each, and 4 had four candidates each. Most of 
the triple and quadruple candidacies occurred in Borsod-Abauj- 
Zemplen, Fejer, and Pest counties and in Budapest. Of the 152 
people who were not originally on the PPF list and were nominated 
from the floor, 78 received the necessary one-third votes at two 
or more nominating meetings, and 51 of them had been proposed 
in addition to the 2 nominees successfully nominated by the PPF. 

About 1.5 million people, or 20 percent of the country's eligible 
voters, participated in the nominating meetings for the 1985 elec- 
tions to the National Assembly and the local councils. Approxi- 
mately 150,000 people asked to speak out at the meetings in support 
of the proposed candidates. 

In the general election, abstention rates were high by East Eu- 
ropean standards. Turnout in the whole country was 93.9 percent, 



184 



Government and Politics 



down from 97 percent in 1980. The turnout in Budapest was 88.4 
percent. The number of valid votes cast (votes submitted accord- 
ing to the rules) was 94.6 percent; in Budapest this figure was 92.3 
percent. Negative votes — votes cast against all candidates on the 
ballot — amounted to 1.2 percent of valid votes. 

Of the 352 electoral districts, 42 required runoff elections be- 
cause no candidate could muster the required 50 percent plus one 
of the valid votes. Another eighty constituencies had close contests. 
Of the seventy-eight independents who gained nomination, forty- 
three won seats after runoff elections. Nevertheless, thirty- three 
of these forty-three candidates were party members. The propor- 
tion of independent candidates was quite low, but, according to 
American political scientist Barnabas Racz, their nomination 
marked an unprecedented development in the history of East 
European elections. 

Although the 1985 election was democratic by East European 
standards, Hungarian dissidents and Western commentators pin- 
pointed several troubling features. In most of the electoral districts, 
the two PPF candidates were the only nominees. In addition, only 
the priorities of the candidates differed, not their programs. The 
regime subjected campaign literature to strict copying regulations, 
and it took steps to limit publicity for candidates. Dissidents main- 
tained that the procedures favored the big industrial enterprises, 
which packed nomination meetings with supporters for their 
preferred candidates. In turn, these candidates, once elected, formed 
parliamentary lobbies that supported increases in subsidies for the 
industries to which they owed their nomination. 

County and District Government 

In 1989 district government resembled that on the national level: 
a popularly elected local council chose an executive to administer 
the affairs of its jurisdiction. Communes {kdzseg), large communes 
(nagykozseg), cities, and districts of Budapest elected councils on this 
level. District councils elected the county-level councils, which also 
chose an executive. 

The councils served as legislatures for their jurisdictions, while 
a chairman and an executive committee, elected from the ranks, 
carried out the actual administration of government activities. The 
executive committee on the county level supervised the work of 
the executive committee on the district level. In turn, the Council 
of Ministers directed the work of the county executive committees. 
The chairmen of the county and district councils sat on the cor- 
responding executive committees of the HSWP (see Party Struc- 
ture, this ch.). 



185 



Hungary: A Country Study 

Executive committees on each level had their own administra- 
tive apparatus made up of specialized departments to manage 
government activities in their jurisdiction. Within their sphere of 
influence, the executive committees could appoint and remove the 
directors of branch organizations administering these services. 
However, these personnel decisions required approval by the ex- 
ecutive committee at the county level or by the Council of Ministers. 
In addition, when the executive committee appointed local offi- 
cials, it had to take into account the standards established for those 
positions by the Council of Ministers. The Council of Ministers 
also had the right to submit its own nominees for positions in the 
district and county administrations (see Council of Ministers, this 
ch.). 

District and county government dealt with services that had the 
most immediate impact on the lives of the citizenry: education, 
housing, day care facilities, and medical care. In the late 1980s, 
the local government had jurisdiction over 90 percent of the 
preschool and day care facilities, all general (elementary) schools, 
most middle schools, 90 percent of government-owned housing, 
80 percent of the hospital beds, and 70 percent of the libraries, thea- 
ters, and educational centers. The national government had direct 
control over areas such as railroads, waterways, postal and fire ser- 
vices, and communications. Local councils also had some power 
in passing a budget for their jurisdiction and to manage its exe- 
cution. 

In the late 1980s, county and district government had relatively 
large authority in managing the local economy. About 14,000 en- 
terprises and firms meeting the needs of the local population were 
under their jurisdiction. The law allowed local governments to create 
these enterprises. The national government also permitted local 
government to approve the plans of these enterprises, which func- 
tioned mainly in the service sector. 

Since 1983 multicandidate elections to the district councils have 
been mandatory. In the 1985 elections, an estimated 88,000 can- 
didates competed for the 42,734 district seats. About 5.4 percent 
of district constituencies had triple candidacies, and 0.2 percent 
had quadruple candidacies. Reports of the nomination meetings 
indicated an average participation of from 200 to 400 people, a 
very small fraction of the approximately 30,000 people per district. 
In addition, problems emerged in many districts. In Bacs-Kiskun 
County, the organizers combined the meetings of the twenty- 
seventh and twenty-eighth council districts and allowed them to 
vote jointiy for each other's nominees. The PPF nullified the results. 
In Budapest two different constituencies nominated the same 



186 



City hall in Gyor 
Courtesy Gustav Forster 




person. In 102 districts, the nominating meetings had to be 
repeated. 

Judicial Organs 

The district courts, labor courts, and military courts lay at the 
bottom of the judicial hierarchy. District courts were the courts 
of first instance in all disputes. Labor courts operated in Budapest 
and the counties, hearing cases on appeal from labor affairs arbi- 
tration committees and other extrajudicial entities dealing with labor 
matters. Military courts operated in garrisons and some military 
units, concerning themselves with military cases and other cases 
that affected national defense (see Military Justice, ch. 5). The 
Supreme Court heard appeals directly from the military courts. 

County courts served as courts of first appeal for decisions of 
the district courts and the labor courts. The county courts also acted 
as courts of first instance in certain cases involving murder, will- 
ful homicide, and grave crimes against social property. These courts 
functioned as courts of first instance in civil suits of a certain mag- 
nitude directed against the state, government officials, or socialist 
enterprises. 

The Supreme Court acted as the court of appeal for the county 
courts and the military courts. One of the judges of the Supreme 
Court or one of the court's judges working together with lay as- 
sessors (non-professional judges) could act as court of first instance 



187 



Hungary: A Country Study 



for certain important cases. These decisions could then be appealed 
to a council of the Supreme Court. Councils of the Supreme Court 
specialized in military, civil, criminal, labor affairs, or economic 
cases. The Presidential Council of the Supreme Court heard ap- 
peals from these councils on points of law. 

Professional judges and lay assessors presided over the courts. 
When courts on any level acted as courts of first instance, they con- 
sisted of a professional judge and two lay assessors, although the 
law provided for some exceptions. Courts hearing appeals consisted 
of three professional judges, with the exception of the Presidential 
Council of the Supreme Court, which was led by the council's 
president. 

The Supreme Court could issue "guiding principles or decisions 
in principle" when guidance was necessary "in the interests of 
guaranteeing uniformity or on questions of legal interpretation." 
These decisions were binding on the lower courts. Other decisions 
of the Supreme Court were not binding, but they influenced the 
decisions of the lower courts. 

The prosecutor general supervised observance of the law. This 
official, who was appointed by the National Assembly upon recom- 
mendation of the party's Central Committee, headed a hierarchy 
of prosecutorial offices organized on the county and district levels. 
The prosecutor general undertook criminal investigations and prose- 
cutions and reviewed the legality of actions taken by governmen- 
tal, social, and economic organs. Only the National Assembly, 
Presidential Council, and Council of Ministers were excluded from 
the authority of the prosecutor general. 

Hungarian Socialist Workers' Party 

The Hungarian Socialist Workers' Party (HSWP) formed the 
"revolutionary vanguard of the working class" that "organizes and 
guides the people in their struggle to construct a Socialist society." 
The ideology, method of decision making, and structure of the 
HSWP all derived from the Communist Party of the Soviet Union 
(CPSU). The method of decision making — democratic cen- 
tralism — stifled intraparty dissent and secured the control of cen- 
tral party organs over the personnel appointments and the activities 
of lower party organs. 

In the late 1980s, the HSWP was a top-down, centralized or- 
ganization. In theory, representative party bodies such as the party 
congress held supreme decision-making authority. In practice, bod- 
ies such as the party congress and the Central Committee on the 
national level and the conference on the county and district levels 
were too large and met too infrequentiy to exercise decision-making 



188 



Government and Politics 



power (see fig. 9). The Politburo and Secretariat centralized power 
on the national level, and the party bureaus did so on the county 
and district rungs of the hierarchy. The Basic Organization, the 
lowest level on the hierarchy, supervised the activities of rank-and- 
file members in factories, collective farms, and the armed forces. 

The party, aiming to be a monolithic organization, enforced strict 
discipline on the membership for violating the Party Rules (see Glos- 
sary) and for infringing on the norms of democratic centralism. 
The party also attempted to preserve its elite status within society. 
Therefore, it was very selective in its recruitment policies. Although 
originally the self-proclaimed party of the working class, in the late 
1980s the intelligentsia predominated in its ranks. 

The PPF, a mass organization working under the direction of 
the party, acted as a "transmission belt" for party policies. As of 
the late 1980s, it had not yet carved out an independent role for 
itself in Hungarian politics. 

Ideology 

The HSWP, as a party created under the influence of the CPSU, 
generally adhered to the Soviet concept of Marxism- Leninism, 
which regarded the essence of socialism to be state ownership of 
the means of production, controlled by a dictatorship acting in the 
name of the working class. Hungarian ideologists echoed their 
Soviet mentors. For example, Gyorgy Aczel, until mid- 1988 a mem- 
ber of the Politburo, stated that "a society can be called socialist 
when a new political system and mechanism come into being on 
the basis of new conditions of ownership." 

According to Hungarian Marxist-Leninists, the welfare of the 
working class constituted the historical goal of the party. However, 
since 1956 the HSWP has sought to represent the interests of all 
Hungarians and has devoted greater resources to promoting the 
spiritual and material progress of the whole society. The party also 
has come to acknowledge that "a perfect, complete Marxism does 
not, cannot, and will never exist" and therefore has rejected the 
notion of a set of eternally valid ideological premises emanating 
from Moscow. Rather, since the late 1950's the HSWP has sought 
to adapt general Marxist-Leninist ideas to Hungarian conditions. 
In the late 1980s, the party considered the country's socialist 
development to be in transition between the stage of intermedi- 
ate economic development and the stage of "developed social- 
ism." Developed socialism promised the intensive development 
of the economy, emphasizing qualitative improvement in working 
conditions and the standard of living, as well as liberalization of 



189 



Hungary: A Country Study 




Government and Politics 



the political system to encourage incipient pluralism and popular 
political participation. 

Democratic Centralism 

According to the Party Rules, the "HSWP is built on the prin- 
ciple of democratic centralism." In theory, democratic centralism 
calls for the democratic election of all members of leading organs 
by secret ballot, subordination of lower party organs to higher party 
organs, and the obligation of the leading organs to report regu- 
larly on their activities to their party organization. 

In practice, intraparty democracy functioned within narrowly 
circumscribed limits set by party leaders, who were the only offi- 
cials able to change party policies. In addition, when the party made 
a decision, members possessed only the information provided to 
them by the party hierarchy. Based on that information, the leader- 
ship expected the rank and file to endorse its decisions. Delegates 
sent to meetings at the next highest level were, in fact, chosen by 
the leaders they ostensibly elected. Moreover, the central party ap- 
paratus controlled personnel appointments and ensured that only 
"trustworthy" members were appointed to positions of authority. 

In the late 1980s, party leaders acknowledged problems with this 
form of decision making. For example, a party document argued 
that "if democracy is narrowed down, then issues are solved only 
by the leadership and a group of experts." This document main- 
tained that greater participation of the rank and file would ensure 
wider responsibility and decisions of higher quality. 

Indeed, in 1988 the party loosened some of democratic central- 
ism's traditional precepts. For example, in June 1988 the Budapest 
party committee chose among two candidates — Mihaly Jasso and 
Pal Ivanyi — for the position of first secretary of the Budapest party 
committee. An eight-person nominating committee selected the can- 
didates based on consultations with party committee members, 
department heads, district first secretaries, and other activists. In 
the first two votes, neither candidate received the required 50 per- 
cent plus one of the valid votes. On the third vote, Jasso received 
a majority. Later in 1988, the party loosened other strictures, thus 
allowing party members to join organizations, movements, and 
associations considered by the party to be its "potential or actual 
allies." 

In July 1988, more evidence appeared that the party was loosen- 
ing the norms of democratic centralism. The Central Committee 
approved a resolution reducing the party's nomenklatura authority 
over a number of party, government, and economic positions. In 
1973 approximately 1,700 such positions existed, of which more 



191 



Hungary: A Country Study 

than 800 could be filled by Central Committee secretaries (see Party 
Structure, this ch.). In 1985 the Central Committee reduced the 
number of such positions to 1,241. A Central Committee resolu- 
tion of July 13-14, 1988, further lowered the number of these po- 
sitions to 435. However, in 1988 Istvan Petrovszki, the head of 
the Central Committee's Party and Mass Organizations Depart- 
ment, reported that the party would not completely halt the prac- 
tice of recommending personnel for key positions. When these 
appointments concerned staff in such bodies as the National As- 
sembly, the PPF, and the National Council of Trade Unions, each 
of which had the right to nominate and elect its own officials, the 
party would make recommendations. However, if these organiza- 
tions selected their own nominees, the party would oppose the selec- 
tion, according to Petrovszki, only if it questioned the person's 
' 'political reliability." 

Despite some changes in the procedures of democratic central- 
ism, in the late 1980s participation in decision making remained 
low in the HSWP. Party studies continued to show that the level 
of activity and the quality of party work among the rank and file 
were poor. Individuals or, at most, small committees selected 
nominees for party offices. Indeed, Sandor Lakos, editor in chief 
of Pdrtelet (Party Life), wrote in the late 1980s that the most im- 
portant question facing the party was how to create greater party 
democracy. 

Party Structure 

In theory, the party congress formed the highest authority in 
the HSWP, although, because it met only once every five years, 
it lacked real power. Its members were appointed by officials of 
the Central Committee and the Politburo, two organs nominally 
responsible to the party congress. The Central Committee, which 
included more than 100 members and usually met once every three 
months, also was too large to exert much influence. The Central 
Committee yielded in real power and authority to the Politburo 
and the Secretariat. Also nominally subordinate to the party con- 
gress was the Central Control Committee, which enforced party 
discipline. 

The Politburo and the Secretariat paralleled a set of governmental 
institutions that included the Council of Ministers and the Presiden- 
tial Council (see Presidential Council, this ch.). The difference be- 
tween party and government institutions lay in the distinction 
between policy formation and policy execution. In general, the party 
formulated policy and the government carried it out. Since the early 
postwar period, however, the party has been heavily involved in 



192 



Government and Politics 



executing economic, domestic political, and foreign policies. 
Nevertheless, in the late 1980s party leaders, especially General 
Secretary Grosz, called upon party organs to withdraw from day- 
to-day supervision of policy execution and content themselves with 
establishing broad policy guidelines. 

Within the party, the Politburo was responsible for selecting pol- 
icy alternatives. The Secretariat produced policy alternatives for 
the Politburo, and, once that body made a decision, the Secretariat 
carried them out. Of course, in fulfilling its role the Secretariat 
often made policy decisions itself. 

The structure of intermediate party organizations on the county 
and district levels resembled that of the central institutions. Ac- 
cording to the Party Rules, the authoritative body at each level 
was the conference, which elected a committee that in turn chose 
a bureau with several members (including a first secretary) and 
a secretariat. Conferences at the district level elected delegates to 
the county party conference. However, in the late 1980s the norms 
of democratic centralism dictated that party leaders at each level 
approve the composition of the conference that elected them, as 
well as the composition of party committees, bureaus, and secre- 
tariats on the next lowest level. 

Basic Organizations made up the lowest rung of the party hier- 
archy. In contrast to higher rungs on the hierarchy, which were 
organized on a territorial basis, the Basic Organizations were lo- 
cated at places of work, residences, and armed forces units having 
more than three party members. The party meeting formed the 
highest authority at this level. The only full-time, salaried party 
official in the Basic Organization was the secretary. 

Central Institutions 

Central party institutions made decisions binding on the party 
as a whole. In addition, they made policy for every aspect of the 
country's domestic and foreign policies. Hungary's central party 
institutions, like those of other Marxist- Leninist parties of Eastern 
Europe, were modeled on those of the CPSU. 

Party Congress 

According to the Party Rules, the congress was the * 'highest 
organ of the HSWP." The congress had the following powers: it 
debated reports of the Central Committee and the Central Con- 
trol Committee, approved the Party Rules, elected the Central Con- 
trol Committee and the Central Committee, determined the general 
guidelines of party policy, and determined the most immediate and 



193 



Hungary: A Country Study 

important tasks of socialist construction. The Central Committee 
convened a party congress once every five years. 

In fact, the party congress usually legitimated policies decided 
upon elsewhere. The Politburo gave its prior approval to officials 
elected by the party congress. The congress merely ratified solu- 
tions to political, social, and economic problems that had been de- 
veloped by the Secretariat and approved by the Politburo. Thus, 
party congresses had mainly a propagandistic character. 

The agendas of all party congresses in the postwar period have 
been similar. The general secretary reads the report of the Cen- 
tral Committee. Debates and approval of the report follow. Speeches 
are read by leaders of foreign communist party delegations, with 
the representative of the CPSU going first. The congress also adopts 
reports of other party organs as well as a party program. Finally, 
the congress "elects" the Central Committee, the Secretariat, and 
the Central Control Committee. 

The Thirteenth Party Congress, held March 25-29, 1985, made 
no important changes in HSWP policies, continuing the general 
policy line of the 1960s and 1970s. In contrast to earlier party con- 
gresses, however, greater degrees of candor and open criticism 
characterized the Thirteenth Party Congress. Social problems dis- 
cussed included the declining birth rate, the poor quality of health 
services, and the inequalities created by economic reform. 

The Thirteenth Party Congress had 935 delegates, or about 1 
for every 1,000 party members. The social composition of the 
delegates mirrored the social composition of the party as a whole 
(see Social Composition of the Party, this ch.). Workers and 
peasants made up approximately 30 percent of the delegates. Func- 
tionaries in party and social organizations made up 23.1 percent 
of the delegates, leading executives and administrators 24.9 per- 
cent, and employees 8.4 percent. Women comprised about 27 per- 
cent of the delegates. 

The Central Committee also had the power to convene a party 
conference at any time during the interval between congresses. The 
party held its first conference in May 1945 and its second in June 
1957. In May 1988, the HSWP leadership convened the Third 
Party Conference. 

The Third Party Conference had 1 delegate for every 1 ,000 party 
members, or a total of 859 delegates. In addition, the 106 Central 
Committee members and 25 members of the Central Control Com- 
mittee also had the right to vote. The conference had powers simi- 
lar to a party congress. It approved new directions in economic 
and social policy, and it ratified important personnel changes in 
the leadership. Grosz succeeded Kadar as general secretary, and 



194 



Government and Politics 



the conference created for Kadar the new, largely honorific posi- 
tion of chairman of the party. In addition, liberal reformers Rezso 
Nyers and Imre Pozsgay became Politburo members. 

Central Committee 

Between party congresses, in principle the supreme power in the 
HSWP rested with the Central Committee. The Central Committee 
acted on "behalf of the party with respect to state, government, 
and social organs and in international relations." The Central Com- 
mittee, according to the Party Rules, held plenums at least once 
every three months. It had the power to elect department heads 
of the Central Committee apparatus; direct the operations of the 
party's central institutions, newspapers, and periodicals; nominate 
the editorial boards of the central publications; supervise the per- 
formance of professional party activists; allocate party funds; con- 
trol the work of government organs; and approve the economic 
plan, other economic and social policies, and the national budget 
for debate and ratification by the National Assembly (see National 
Assembly, this ch.). The Central Committee also administered lead- 
ing party education institutions, such as the Political College and 
the Social Science Institute, and dealt with ideological questions 
and international affairs. Virtually the whole life of the country 
fell within the purview of the Central Committee. 

The Thirteenth Party Congress elected a 105-member Central 
Committee. That congress retained seventy-six members elected 
at the Twelfth Party Congress in 1980 and elected twenty-nine new 
members. In June 1987, the Central Committee grew to 107 mem- 
bers after the deaths of 5 members and the appointments of 7 others. 
In April 1988, the Central Committee had 106 members after the 
death of another member. 

Personal merit and institutional affiliation determined who was 
selected to the Central Committee, with most members selected 
because of their positions. Members included officials of the central 
party apparatus, party leaders on the county level, and leading offi- 
cials of the trade unions, the military, and mass organizations. Some 
economic officials also gained membership. Other members of the 
Central Committee worked in the media or were active in the fields 
of science, culture, or the arts. 

Central Control Committee 

According to the Party Rules, the Central Control Committee 
"works to assist the strengthening of the party's ideological, polit- 
ical, [and] organizational unity, and the instruction of party mem- 
bership; keeps watch over the political behavior, party loyalty, and 



195 



Hungary: A Country Study 



moral purity of the party membership; [and] fights consistently 
against all forms of antiparty factional activity." This committee 
conducts disciplinary investigations, hears appeals against decisions 
of lower party organs, and audits the economic and financial records 
of party bodies. In 1985 the Thirteenth Party Congress elected 
twenty-five members to this committee. A chairman and a secre- 
tary managed the work of this party organ. 

Politburo 

The Central Committee nominally elected the membership of 
the Politburo, which directed party activity between plenums of 
the Central Committee. The Politburo consisted of the country's 
most powerful political leaders; its members occupied the most im- 
portant positions in the party, government, and mass organiza- 
tions. In early 1989, Politburo membership included Grosz, the 
general secretary; Janos Berecz, the party's leading ideologist; 
Istvan Szabo, an agricultural specialist; Csaba Hamori, the chair- 
man of the Central Committee's Youth Committee; Janos Lukacs, 
Central Committee secretary for party organization; Pal Ivanyi, 
Central Committee secretary for economic policy; Miklos Nemeth, 
the chairman of the Council of Ministers; and other government 
and economic administrators. Each Politburo member had respon- 
sibility that often overlapped with an area managed by a govern- 
ment ministry. 

The Politburo usually met once a week to address the country's 
foreign, military, economic, and domestic policies. The Politburo 
conducted its meetings in secret, although it often invited other 
members of the party, government, and mass organizations to at- 
tend. The general secretary chaired the meeting, and decisions ap- 
peared to be reached by consensus. The Politburo informed Central 
Committee plenums about the issues discussed at these weekly 
meetings. 

Traditionally, succession to the position of general secretary has 
presented problems for the political elite. No institutionalized proce- 
dures governed the transfer of power from one general secretary 
to the next. And in the late 1980s, the general secretary did not 
have a set term of office. The general secretary had to secure power 
by promoting trusted clients to positions of power and influence 
within other leading party, government, and state institutions. Like 
other Soviet satellite parties in Eastern Europe, the HSWP Polit- 
buro usually gained prior Soviet approval for the appointment of 
its general secretary. The general secretary also required con- 
tinued Soviet support to remain in office. Thereafter, the general 
secretary had to establish his authority by generating successful 



196 



Government and Politics 



economic, social, and foreign policies. Kadar accomplished all these 
objectives, and he remained in the post of general secretary from 
1956 to 1988. However, when the leadership deemed Kadar too 
conservative to push forward further economic and political reforms, 
it ousted him in favor of Grosz, having gained Soviet approval to 
do so. 

Secretariat 

The Secretariat served as the staff of the Politburo, administer- 
ing a bureaucracy that oversaw all aspects of the party's and the 
country's activities. The Secretariat, which consisted of five secre- 
taries, prepared decisions for Politburo approval and either im- 
plemented these decisions itself or ensured that the responsible 
government bodies carried them out. In early 1989, four secre- 
taries — Grosz, Berecz, Lukacs, and Ivanyi — also sat on the Polit- 
buro and were the most powerful of the five members of the 
Secretariat. 

The general secretary supervised the work of the Secretariat as 
a whole. In 1989 the five secretaries maintained responsibility for 
ideology, defense and internal security, party organization, for- 
eign policy, and economic policy. Each secretary worked with a 
small staff of three to five assistants. The four powerful secretaries — 
Grosz, Berecz, Lukacs, and Ivanyi — also chaired committees of 
the Central Committee for international, legal, and state manage- 
ment policy; social policy; party policy; and economic and social 
welfare policy, respectively. In 1989 working groups of the Cen- 
tral Committee formulated long-term policy recommendations in 
the areas of party building, economics, educational and cultural 
policy, science policy, and cooperatives policy. 

In the late 1980s, the heads of the five Central Committee depart- 
ments for social policy, party policy, economic and social welfare 
policy, international party relations, and management and the head 
of the Central Committee Office (also considered a Central Com- 
mittee department) answered to the secretaries. Departments con- 
trolled the work of their counterparts on the county and district 
levels of the party. In addition, they maintained working relations 
with their counterparts in the CPSU and the relevant departments 
in the allied communist parties of Eastern Europe. The depart- 
ments worked closely with their corresponding ministries to en- 
sure that the government properly implemented party policies. In 
the late 1980s, this task changed, however, as the party leadership 
sought to lessen the involvement of the party apparatus in the day- 
to-day administration of the economy. As a result, in late 1988 the 



197 



Hungary: A Country Study 

Politburo targeted the 249-member staff of the Central Commit- 
tee for reductions of 8 to 10 percent. 

Intermediate Institutions 

Intermediate party institutions embraced organs on the county 
and district levels. The structure of the party on these levels resem- 
bled that on the national level. In principle, at each level the most 
authoritative body was the conference, which was attended by 
delegates from lower levels. These conferences took place every two 
years to review reports, discuss the activities of the government 
and party bodies under their jurisdiction, and elect a party com- 
mittee. The conference also elected delegates to the conference at 
the next highest level. District conferences thus selected delegates 
to the county party conference, and the county party conference 
elected delegates to the party congress. If a Basic Organization had 
more than 1 ,500 members, it elected delegates direcdy to the county 
party conference. In fact, the party leadership at each level nomi- 
nated the delegates, and the party conferences merely confirmed 
these nominations. 

Between meetings of the conferences, the party committee con- 
stituted the highest authority on the district and county levels. The 
committees on the county level met every three months, and those 
on the district level met every two months. These committees chose 
a bureau and a secretariat to manage the affairs of their jurisdic- 
tions between committee meetings. Party bureaus consisted of the 
first secretary, the head of the county or district government, and 
specialists in industry, economics, agriculture, and youth and ideol- 
ogy. The first secretary at each level was the most powerful offi- 
cial in the jurisdiction. 

The secretariat of the county and district party bureaus coordi- 
nated and supervised the implementation of party policies in the 
party bureaucracy and the government (see fig. 10). The secretar- 
ies and the bureaus answered to their respective conferences and 
committees, but they also received directions from the organs above 
them, particularly the Secretariat of the Central Committee. 
However, the primary duty of the district-level apparatus was to 
supervise the Basic Organizations. This apparatus also approved 
the admission and expulsion of members by the Basic Organi- 
zations. 

Basic Organizations 

A Basic Organization existed in every government institution, 
production unit, residential unit, and armed forces unit having three 
or more party members. In 1985 the party had 25,402 Basic 



198 



Government and Politics 



Organizations, of which 37.2 percent were in government institu- 
tions or the armed forces, 30.2 percent in industrial enterprises, 
15 percent in agricultural enterprises, and the remainder in resi- 
dences scattered throughout the country. 

The membership meeting had the highest authority in the Basic 
Organization. According to the Party Rules, membership meet- 
ings had to be held at least once every two months. The member- 
ship meeting elected a secretary, a deputy secretary, and a small 
bureau to administer the affairs of the Basic Organization. In Basic 
Organizations of fewer than ten members, the membership meet- 
ing elected only a secretary and a deputy secretary. Often the dis- 
trict organization nominated the secretaries as part of its nomenklatura 
authority. In the 1980s, however, competitive elections became 
more frequent. In 1985 one-third of the newly elected secretaries 
were newcomers to the position, and, compared with 1980, the 
number of multiple candidacies rose. Large Basic Organizations 
were divided into party groups, which elected a steward to direct 
their affairs. The party groups assessed the work and behavior of 
their members and the fulfillment of party tasks. 

The Basic Organization performed several tasks. Most impor- 
tant, the Basic Organization implemented party decisions in the 
economic enterprise or other unit under its jurisdiction. The Basic 
Organization conducted agitation and propaganda to explain party 
policies to nonparty members, to inspire nonparty members to meet 
regime goals, and to encourage enthusiasm in the workplace. The 
Basic Organization admitted new members subject to the approval 
of the district party organization. The Basic Organization gave in- 
formal courses for party and nonparty members on ideology, party 
history, and current events. The Basic Organization controlled the 
activity of enterprise management to ensure the fulfillment of its 
economic plan. Finally, the party expected the Basic Organizations 
to be vigilant and to report activities within their jurisdiction that 
could be considered harmful or disloyal. 

Discipline 

The Party Rules stated that members who violated party norms 
were subject to punishments ranging from a reprimand to expul- 
sion. In addition, a less formal form of punishment involved the 
so-called "exchange of party cards," in which the old party cards 
were replaced for the faithful and the membership of those per- 
sons who had broken party discipline was revoked. 

The HSWP could take several forms of disciplinary action against 
its members. Punishments included a reprimand, censure, severe 
censure, severe censure with final warning, and expulsion. From 



199 



Hungary: A Country Study 



FIRST SECRETARY 



SECRETARIES 



1 f 



PARTY ADMINISTRATION 


PROPAGANDA 


ECONOMIC 


ACCOUNTING 


AND MASS 


AND 


POLICY 


AND 


ORGANIZATIONS 


EDUCATION 




SERVICES 



Source: Based on information from Hans-Georg Heinrich, Hungary: Politics, Economics, and 
Society, Boulder, Colorado, 1986, 55. 

Figure 10. Structure of the County Committee Apparatus, 1986 

1980 through 1985, the HSWP expelled 7,639 members. In addi- 
tion, the party could suspend members from their office for a spec- 
ified period of time or could recall party members from public 
office. 

Disciplinary proceedings took place at the membership meet- 
ings of the Basic Organization. Higher party organs confirmed or 
rejected the decision of the Basic Organization. Ultimately, the 
party's Central Control Committee could also review the deci- 
sion. 

The exchange of party cards took place on a party- wide scale. 
Between 1945 and 1977, six such exchanges occurred. The HSWP 
began another exchange of party cards in 1986 to strengthen party 
discipline and maintain Kadar's control over the party. As of April 
1988, approximately 46,000 members left the party as a result of 
that exchange: 250 were expelled, about 40,000 left voluntarily, 
1,500 were advised to leave, and 4,000 were taken off the mem- 
bership list, probably for failure to pay their membership dues. 

Membership 

The HSWP placed strict requirements on membership in the 
party. Members had to work actively on the party's behalf and 
set a moral and political example for nonparty members. 



200 



Government and Politics 



The HSWP opened membership to persons at least eighteen years 
of age who accepted Marxist-Leninist ideals, participated in one 
or more of the party's Basic Organizations, and paid their dues. 
In addition, the Party Rules obliged members to accept the poli- 
cies, guidelines, and organizational rules of the HSWP. The Party 
Rules called upon members to be politically active and morally 
above reproach, command the respect of others for their work, and 
4 'live in a socialist fashion." The party enjoined its members to 
master the fundamentals of Marxism-Leninism, expand their prac- 
tical and theoretical knowledge of this ideology, and fight against 
the remnants of bourgeois ideology and morality. Members had 
to observe the rules of party discipline and execute the decisions 
of the party and the government. Members also undertook self- 
criticism to expose their own shortcomings. Finally, they worked 
to strengthen and expand the party's links with the masses and to 
propagate the party's ideals and policies. 

Party members enjoyed certain rights. They participated in the 
discussion of theoretical, political, and organizational issues at party 
meetings and voted on the adoption of resolutions. Members had 
the right to vote in party elections and to stand as candidates. Mem- 
bers were able to criticize "in a party-like manner" the work of 
another party member or party organ at meetings, to present a 
request or recommendation to the Basic Organization, as well as 
to higher party bodies including the party congress, and to receive 
a valid response. However, democratic centralism discouraged such 
criticism. Any party member who questioned the policies of the 
leadership would be subject to party discipline. 

Social Composition of the Party 

In mid-1988 the HSWP had about 817,000 members, or 10.3 
percent of Hungary's adult population. Nominally the party of the 
working class, the HSWP actually was dominated by members of 
the intelligentsia. Men outnumbered women. 

Since 1956 the proportion of workers and peasants in the party 
has declined. In 1962 industrial and agricultural workers made up 
59 percent of the party. This figure dropped to 38 percent in 1970, 
and by 1985 it had declined to 31.9 percent. By contrast, in 1975 
members of the intelligentsia made up 40 percent of the member- 
ship, and by 1985 that figure had risen to 42.4 percent. 

Other statistics showed that members used their membership to 
raise their social status. In 1985 about 62 percent of party mem- 
bers originally were workers when they joined the party and 8.9 
percent originally were peasants. As a result of the influence that 
party members held in society and the favors that the regime granted 



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Hungary: A Country Study 

to party members, about 40 percent of the party membership was 
able to climb into the ranks of the intelligentsia from the working 
class and the peasantry. Thus, children of workers and peasants 
used the party as a vehicle of upward mobility. Having joined the 
"political class," party members, particularly full-time party offi- 
cials, could pass their new status on to their children. 

Statistics on the educational background of party members con- 
firmed the dominance of the intelligentsia. In 1985 approximately 
21 percent of party members had received degrees from a higher 
educational institution. The corresponding figure for the popula- 
tion as a whole was only 6.1 percent. In 1985 about 43.9 percent 
of the membership had a high school or special secondary school 
education. The figure for society as a whole was 27.1 percent. Be- 
tween 1975 and 1985, the proportion of members who had no more 
than a primary- school education declined from 55.4 to 28.4 percent. 

Historically women have formed a minority of the party's mem- 
bership, although since the 1960s their percentage of the member- 
ship has risen. In 1966 women made up 22.9 percent of the HSWP, 
and by 1970 this figure had risen to 24.4 percent. By mid-1988 
women made up approximately 32.1 percent of the party. In the 
late 1980s, however, women generally had not advanced into posi- 
tions of power. For example, in the Central Committee elected in 
1985, a mere 11 percent of the members were women. In early 
1989, only two women sat on the Politburo. 

Patriotic People's Front 

According to the Constitution, the Patriotic People's Front (PPF) 
' 'unites the forces of society for the complete building up of social- 
ism, for the solution of political, economic, and cultural tasks." 
The Constitution adds that the PPF "cooperates in the election 
and operation of the organs of popular representation." The PPF 
facilitated broad mass participation in regime policies and gener- 
ated mass support for party programs. In 1988, according to Imre 
Pozsgay, at that time head of the PPF, the tasks of that organiza- 
tion included helping to achieve a new social accord in Hungary, 
consolidating new public thinking in the public consciousness, and 
helping citizens to participate in building a socialist society from 
below. 

Approximately 130,000 grass-roots committees elected by local 
citizens carried out PPF policies on the local level. A congress of 
the PPF met every four years to elect its National Council and to 
review the activities of the organization. The National Council 
elected the National Presidency and the National Secretariat, which 
managed the PPF and set policy for it. 



202 



Government and Politics 



The PPF undertook a variety of tasks. Perhaps most important, 
it organized national and local elections (see Elections to the Na- 
tional Assembly; County and District Government, this ch.). The 
PPF served as an umbrella organization that united such bodies 
as the National Council of Hungarian Women, the National Gypsy 
Council, and other bodies representing national minorities in Hun- 
gary. The PPF also provided a framework for cooperation among 
different classes and strata of society, between religious believers 
and nonbelievers, and between party members and nonparty mem- 
bers. Finally, the PPF attempted to protect citizens' interests by 
leading the struggle against the corruption and abuse of power. 

Mass Media 

In Hungary the media served as instruments of regime policy, 
so their primary task was to promote the party's policies. Although 
other organizations, such as the PPF, the Communist Youth 
League, and the trade unions, produced their own publications, 
the regime controlled their content (see Mass Organizations, ch. 2). 
In the 1980s, the regime continued to suppress other sources of 
information, although it made available in hotels some Western 
periodicals and newspapers. The regime banned private owner- 
ship of the media. 

In the late 1980s, Hungary had no censorship laws. However, 
informal censorship occurred in a number of different ways. Both 
the party and the government had organs for censorship. The party 
set guidelines, which were transmitted from its Department for Agi- 
tation and Propaganda to the lower party organs and to the edi- 
tors in chief of the media. The Council of Ministers' Information 
Bureau acted as the government's agency for censorship (see Coun- 
cil of Ministers, this ch.). The Hungarian Telegraph Agency 
(Magyar Tavirati Iroda — MTI) was the primary source of infor- 
mation for the media. Because the news media often lacked other 
sources of information, they depended on MTI for materials. MTI 
could thus exercise centralized control over the kinds of informa- 
tion that appeared in print or over the airwaves. The regime care- 
fully selected editors and informed them about party and 
government censorship standards. Editors could be fired for failure 
to comply with these standards. For example, in 1983 Ferenc Kulin, 
editor of Mozgo Vildg (World In Motion), lost his position for "sys- 
tematic defiance" of party directives. Editors often exercised in- 
formal censorship, rejecting an article, for instance, because they 
claimed it did not suit the profile of their publication. Editors also 
exercised censorship when they recommended changes to a work 
that removed or softened its politically sensitive parts. Paradoxically, 



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Hungary: A Country Study 



the lack of censorship standards encouraged editors to take a con- 
servative approach to censorship to ensure that their publications 
did not include materials that might offend anyone in authority. 

On March 20, 1986, the National Assembly passed a new press 
law defining the "rights and duties of journalists and the right of 
the public to fast and timely information." The law compelled 
government officials to respond to requests for information from 
reporters. Journalists, however, had to submit a copy of their arti- 
cle to people they had interviewed for it. The law prevented the 
publication of materials that "would hurt the constitutional order 
of the People's Republic and its international interests . . . and 
public morals." Critical pieces of writing could be rejected on that 
basis. In addition, according to Politburo member and Central 
Committee secretary Berecz, the law proscribed questioning Hun- 
gary's "socialist achievements" and its "national historical and 
moral values." 

Hungary had three major daily newspapers: Nepszabadsdg (Peo- 
ple's Freedom), the official organ of the HSWP; Nepszava (Peo- 
ple's Voice), the organ of the trade unions; and Magyar Nemzet 
(Hungarian Nation), the organ of the PPF and the most liberal 
of the three newspapers. Nepszabadsdg was the party daily and had 
a circulation of approximately 467,000 in early 1989. In Novem- 
ber 1988, a new daily — A Nap (The Sun) — began publication with 
a circulation of between 80,000 and 100,000 a day. An afternoon 
paper — Esti Hirlap (Evening News) — had a circulation of between 
200,000 and 250,000 a day. 

The regime also published a number of specialized journals. 
Tdrsadalmi Szemle (Social Review) was the HSWP's ideological 
monthly; it had a circulation of approximately 41,000. Pdrtelet (Party 
Life) had a circulation of about 130,000. Other, more obscure jour- 
nals contained more interesting subject matter by virtue of their 
lower circulation and more specialized audiences. Valosdg (Reality) 
was intellectually the most stimulating journal because it dealt with 
politically sensitive and highly unorthodox topics. 

Most provincial journals treated only topics of regional interest. 
Nevertheless, Jelenkor (Present Age), published in Pecs, and Forrds 
(Source), published in Kecskemet, had wider audiences because 
they included interviews with national literary figures and scho- 
larly research from Budapest. Tiszatdj (Tisza Country), published 
in Szeged, claimed a wide readership because it published materi- 
als on Hungarian national minorities living outside the country. 
However, in 1986 the government banned Tiszatdj because of "pub- 
lication policy mistakes." The editors were dismissed and subjected 



204 



Government and Politics 



to party discipline. The publication reappeared in 1987, and the 
party rehabilitated the editors in early 1989. 

In the late 1980s, television was the most popular form of enter- 
tainment. Approximately 95 percent of Hungarian households had 
a television set. In the early and mid-1980s, Hungarians watched 
an average of 140 minutes of television programs per day. Program- 
ming on the country's two channels ran from mid- afternoon to late 
at night. In addition, some hotels and local cable and aerial sys- 
tems had the equipment to receive and transmit Western-relayed 
satellite programs. Near the country's western border, households 
with a good roof antenna could receive one Austrian, two Yugo- 
slav, and two Czechoslovak channels. 

Hungary's three radio stations broadcast a variety of program- 
ming. In addition, Hungary concluded a radio agreement with Aus- 
tria to establish a joint German-language radio station called Radio 
Danubius. In May 1986, the station began broadcasting a twelve- 
hour program. The station eventually was to attain economic self- 
sufficiency through advertising. 

In the late 1980s, videocassette recorders (VCRs) became very 
popular in Hungary. At the end of 1987, VCRs numbered between 
200,000 and 300,000, and an estimated 1 million people had ac- 
cess to a VCR. In 1984 Hungary became the first East European 
country to have stores renting videotapes, and more than fifty video- 
tape outlets existed in late 1987. The government-operated out- 
lets, however, had only 800 titles and a total of only 15,000 copies. 
Illegally produced, copied, and distributed cassettes accounted for 
80 percent of the videotape market. These tapes treated taboo 
themes such as religion, anti- Soviet sentiments, sex, and violence. 
The regime acknowledged that these tapes had spread throughout 
the country like a "contagious disease" and held them responsi- 
ble for the rise in the crime rate, increased drug use, and the higher 
suicide rate (see Health, ch. 2). 

Foreign Policy 

In the 1980s, Hungary attempted to carve out a semi-independent 
role for itself within the Soviet alliance system in Eastern Europe. 
The origins of the Hungarian position lay in the regime's efforts 
to promote economic reform, which required Western involvement 
and support. The regime also sought to create popular support for 
itself by providing an abundance of consumer goods supplied by 
the West. For reasons of history and tradition, Hungary cultivated 
ties with Austria and the Federal Republic of Germany (West Ger- 
many). In the mid- and late 1980s, Hungary also attempted to fur- 
ther relations with Britain and the United States. In addition, as 



205 



Hungary: A Country Study 

further evidence of its initiative in foreign policy, Hungary devel- 
oped relations with Israel, China, and the Republic of Korea (South 
Korea), which had previously been considered "pariah" states by 
most East European regimes. 

Hungary's most important ally was the Soviet Union, with which 
it has enjoyed particularly good relations since 1986, when Soviet 
leader Mikhail S. Gorbachev initiated his reform program. In the 
late 1980s, Hungary strongly supported Soviet foreign policy posi- 
tions. In return, Hungary received Soviet support for its efforts 
at domestic reform. Hungary also accepted integration into the al- 
liance system through the Council for Mutual Economic Assistance 
(Comecon — see Glossary) and the Warsaw Pact (see Glossary). 

Relations with its other communist neighbors played a crucial 
role in Hungarian foreign policy. The state of relations between 
Hungary and Romania, Czechoslovakia, and Yugoslavia gener- 
ally depended on how these countries treated their Hungarian 
minorities. Because Yugoslavia treated its Hungarian minority well, 
relations between the two countries were excellent. In Czecho- 
slovakia, the relation between Slovaks and ethnic Hungarians were 
not smooth. Through bilateral contacts, Hungary sought to en- 
courage the Czechoslovak government to improve its treatment of 
Czechoslovakia's Hungarian minority. However, Romania's treat- 
ment of the Hungarian minority in Transylvania received world- 
wide condemnation. Hungary sought, through a variety of bilateral 
and multilateral efforts, to encourage more equitable treatment of 
Hungarians in Romania. 

Principles of Foreign Policy 

When superpower relations deteriorated in the early to mid- 
1980s, Hungary defined a role for small- and medium-sized states 
in maintaining ties between countries of the Warsaw Pact and the 
North Atlantic Treaty Organization (NATO). The reasons for 
Hungary's interest in East- West dialogue lay in its relatively liberal 
domestic policies as well as its foreign economic policies. Follow- 
ing the Revolution of 1956, the leadership determined that a pol- 
icy of isolation threatened the stability of the Soviet alliance system 
in general and Hungary in particular. In addition, the leadership 
believed that without access to the world economy, Hungary's econ- 
omy would continue to lag behind the economies of the West. 

In the late 1970s and early 1980s, the Soviet invasion of Afghan- 
istan, the crackdown on the Solidarity labor union movement in 
Poland, and the deployment of United States intermediate-range 
ballistic missiles (IRBMs) in Western Europe led to a deteriora- 
tion of relations between the superpowers. Hungary resisted this 



206 



Government and Politics 



worsening of relations with the West. Thus, the theory that Hun- 
gary had won some freedom of action in the domestic sphere by 
remaining loyal to the Soviet Union in foreign policy lost much 
of its validity in the mid-1980s. 

Several factors led Hungary to push for an independent stance. 
First, the Kadar regime believed that any return to economic iso- 
lation from the West would endanger policies designed to moder- 
nize the economy and to promote political liberalization. In turn, 
these two policies were intended to encourage popular political sup- 
port for the regime and bolster its legitimacy. Their failure could 
have led to political catastrophe for the leadership. Second, Romania 
and the German Democratic Republic (East Germany) were pur- 
suing their own independent initiatives with selected NATO coun- 
tries. The Hungarians believed that their policy would also find 
supporters in Bulgaria and Poland, both of which needed help from 
the West to overcome their economic problems. Third, the Soviet 
leadership experienced internal differences over the issue of East- 
West relations. In 1984 some Soviet economists and political com- 
mentators positively evaluated the Hungarian reforms. The Kadar 
regime believed that it had allies in the top Soviet leadership, pos- 
sibly including then-General Secretary Konstantin U. Chernenko 
himself. 

The Soviet Union used its allies in the Communist Party of 
Czechoslovakia (CPCz) to reply to Hungary's initiatives. On 
March 30, 1984, the CPCz daily Rude prdvo published a scathing 
critique of Hungary's policy, which it labeled "one-sided par- 
ticularism." The article maintained that the Hungarian stance 
would lead to a weakening of the common international strategy 
and foreign policy of the Warsaw Pact, encourage efforts by 
capitalist states to gain one-sided advantages by promoting differ- 
ences among socialist states, and favor a narrow, nationally oriented 
approach to transitory economic difficulties. The Czechoslovak 
newspaper also argued that the Hungarians attached importance 
to distinctions between large and small states rather than to the 
class structure of these states. Finally, Rude prdvo complained that 
national interests were beginning to take precedence over the in- 
terests of the Soviet alliance system as a whole. Articles in several 
Soviet party and government publications echoed the Czechoslo- 
vak comments, suggesting that the CPCz and the CPSU coordi- 
nated their attacks on Hungary. 

Secretary of the Central Committee for Foreign Policy Matyas 
Szurds laid out Hungary's response to the charges of its allies. In 
1984 Szuros began publishing his justifications for Hungary's 
stance. He later added other arguments to underscore Hungary's 



207 



Hungary: A Country Study 

stance. Szuros averred that, although relations between the super- 
powers might be poor, historical traditions and contemporary geo- 
political relations could encourage the development of relations 
between certain socialist states and certain capitalist states. Par- 
ticularly the small- and medium-sized states in each alliance sys- 
tem, through dialogue and constructive relations, could improve 
the international atmosphere and thereby create possibilities for 
the improvement of relations between the United States and the 
Soviet Union. In turn, such an improvement could lead to an overall 
reduction of international tension. 

Szuros believed that national interests had to be given more 
weight when formulating common Warsaw Pact positions on for- 
eign policy and military issues. A conception of the common goals 
of socialist states could command the support of the individual so- 
cialist countries only if it took national interests into account. Szuros 
rejected the notion that, by pursuing its national interests, Hun- 
gary sought to gain one-sided advantages from the West. He wrote 
that as a result of historical and geopolitical factors, capitalist states 
showed different degrees of interest in developing relations with 
the various socialist states. Thus Bulgaria carried on intense rela- 
tions with Greece and Turkey, and Austria and West Germany 
developed close relations with Hungary. 

In 1985 and 1986, Szuros broadened these considerations when 
he wrote that the communist movement lacked an organizational 
and a political center that could enforce prescriptions for behavior. 
He argued that although a common ideology united the interna- 
tional communist movement, ideology was neither a code of dogma 
nor a closed system but a body of ideas undergoing constant change. 
Szuros therefore advocated the "proper adaptation" of the basic 
principles of Marxism-Leninism to specific national circumstances. 
These formulations justified renovations in domestic policy, in turn 
leading to innovations in foreign policy, including Hungary's open- 
ing to the West. 

In July 1986, Szuros went beyond these arguments when he wrote 
that small- and medium-sized countries had more to lose in the 
event of a conflict between the superpowers than did the super- 
powers themselves. Therefore, smaller countries had objective in- 
terests in seeking and maintaining detente. Smaller countries also 
had a special responsibility to contribute to an atmosphere encourag- 
ing the reduction of tension, deepening of dialogue, and strength- 
ening of trust. Therefore, claimed Szuros, small- and medium-sized 
states had interests of their own, regardless of their class structure. 

Relations with the Soviet Union 

In the postwar period, several factors contributed to Soviet 



208 



Government and Politics 



influence in Hungary. The Soviet Union maintained a large troop 
presence in Eastern Europe (see Soviet Influence, ch. 5). The struc- 
tural characteristics of the Warsaw Pact minimized the indepen- 
dence of East European military establishments and the CPSU 
exercised significant political influence within the HSWP and the 
government. 

Relations between Hungary and the Soviet Union also depended 
on a series of more personal factors. Thus, before Gorbachev as- 
sumed power in the Soviet Union, the conservative Soviet leader- 
ship disapproved of Hungarian reform efforts, and relations between 
the two countries were therefore cool. After Gorbachev became 
general secretary of the CPSU and initiated his reform program, 
the leadership of each country found in the other an ally for its 
program of economic and political change. Consequently, begin- 
ning in mid- 1986 relations between Hungary and the Soviet Union 
warmed considerably. 

At the Thirteenth Party Congress, the HSWP stressed the deci- 
sive importance of relations with the Soviet Union. At this con- 
gress, however, Grigorii V. Romanov, then a hard-line member 
of the CPSU Politburo and Secretariat, criticized Hungary for its 
relations with the West. Romanov supported "businesslike con- 
tacts" with capitalist countries, but he warned that the socialist 
countries could not "allow the imperialist forces to use economic 
levers as a means of political pressure and interference in the af- 
fairs of socialist states." Romanov advised Hungary not to go too 
far in increasing trade and cooperation with the West. 

The Twenty-Seventh Party Congress of the CPSU in March 1986 
marked the beginning of a steady improvement in relations be- 
tween Hungary and the Soviet Union. Kadar endorsed the Soviet 
reform program and drew parallels between the CPSU's party con- 
gress and the HSWP's Thirteenth Party Congress. Hungary also 
supported the Soviet Union's foreign policy and disarmament 
proposals. In June 1986, Gorbachev visited Hungary for talks with 
Hungarian party and government leaders. According to the joint 
communique, both sides shared "fully identical views" on foreign 
and security policies. Each side pledged to assist the other in ac- 
celerating socioeconomic and scientific development. 

In the mid- to late 1980s, the Soviet Union sought to expand 
bilateral economic relations and scientific-technical relations with 
Hungary. The Soviet Union needed Hungarian scientific and tech- 
nical expertise as well as economic assistance to strengthen Soviet 
economic reform. Hungary, by contrast, sought to devote more 
resources to its trade with the West and with the newly industrial- 
ized countries of the Third World. 



209 



Hungary: A Country Study 

Soviet efforts to tie Hungary more closely to the Soviet econ- 
omy and to Comecon have achieved some success. In 1985 Hun- 
gary and the Soviet Union signed a long-range economic and 
scientific-technical program of cooperation to last until the year 
2000. The Kadar-Gorbachev talks in 1985 called for the strength- 
ening of scientific-technical cooperation and the development of 
new forms of cooperation between each country's research insti- 
tutes, economic enterprises, and work cooperatives. At a meeting 
between Grosz and Gorbachev in July 1987, the two countries 
agreed to expand bilateral trade in the 1986-90 period. The two 
leaders also commissioned a fifteen- to twenty-year plan for de- 
veloping economic and scientific-technical cooperation between their 
two countries. 

In 1988 two high-level meetings took place between Soviet and 
Hungarian leaders. In April, Soviet then-President Andrei A. 
Gromyko visited Hungary to promote the expansion of bilateral 
ties in light of the changes taking place in both countries. Gromyko 
met with Kadar, and they expressed a common interest in im- 
plementing reform in their own countries and in establishing new 
kinds of cooperation. Grosz was the first East European leader to 
visit the Soviet Union after the CPSU's Nineteenth Party Confer- 
ence in July, a sign of Hungary's close relations with Moscow. 
Gorbachev praised the HSWP party conference and drew parallels 
between the reform efforts of both countries. Grosz called his meet- 
ing with Gorbachev ' 'useful and valuable" and said that the two 
countries had never been more in harmony. 

Relations with Other Communist Neighbors 

In the mid- to late 1980s, Hungary attached particular impor- 
tance to relations with Romania, Czechoslovakia, and Yugoslavia, 
because each of these countries contained rather large Hungarian 
minorities. A common culture and language, as well as family ties, 
linked Hungarians in these countries to Hungary. The Romanian 
government and, to a lesser extent, the Czechoslovak government 
have subjected their Hungarian minorities to various forms of po- 
litical and cultural oppression. On the one hand, Hungarian pub- 
lic opinion has pressured the HSWP leadership and the government 
to work for the amelioration of the harsh circumstances of Hun- 
garians in neighboring countries. The regime, seeking to strengthen 
its legitimacy within Hungarian society, has taken up the cause 
of Hungarians living abroad. On the other hand, the prospect of 
open discord within the Soviet alliance system has restrained Hun- 
garian criticism of Romanian and Czechoslovak nationality poli- 
cies. 



210 



Government and Politics 



Romania 

According to Romanian statistics, 1.7 million Hungarians were 
living in Romanian Transylvania in the late 1980s. Western ex- 
perts maintained that at least 2 million Hungarians inhabited this 
part of Romania, and some estimates put the figure as high as 2.2 
million. Although problems existed earlier, in the mid-1980s 
Romanian treatment of the Hungarian minority became increas- 
ingly harsh. For example, the Romanian city of Bra§ov had no 
Hungarian-language schools, although the city was home to Tran- 
sylvania's second-largest Hungarian minority. In 1983 the Roma- 
nian government reduced Hungarian-language television broadcasts 
from two and one-half hours per day to one hour per day. In 1984 
it discontinued Hungarian-language programming altogether. The 
Romanian government allowed the importation of only one 
periodical — Sakkalet (Chess Life) — from Hungary. The Romanian 
government also attempted to prevent Hungarians from traveling 
to Romania. During the height of the summer tourist season, Hun- 
garians had to wait up to a whole day while Romanian authorities 
searched their cars and baggage. Many Hungarians were not al- 
lowed to enter Romania after the seizure of books, periodicals, and 
even HSWP and Hungarian government newspapers. 

The Hungarian regime failed to respond quickly to the Roma- 
nian actions. As Austrian political commentator Paul Lendvai has 
noted, because all communist countries are, according to their offi- 
cial definition, brothers, they must bury the differences that fre- 
quently appear between noncommunist states. Therefore, until the 
mid-1980s the regime remained silent about the treatment of Hun- 
garians in neighboring countries. For example, after a high-level 
Romanian delegation visited Hungary in April 1985, the joint com- 
munique contained no reference to Romania's nationality problem. 

Beginning in 1984, however, Hungarian criticisms of Romania 
began to surface in the media, and Hungarian leaders began to 
develop their own position on minority nationalities. In August 
1984, the deputy prime minister, Lajos Faluvegi, criticized Roma- 
nia's treatment of its minorities. In a November 1984 speech to 
the Thirteenth Party Congress of the Romanian Communist Party 
(RCP), National Council of Trade Unions secretary Lajos Mehes 
echoed Faluvegi' s comments. The Thirteenth Party Congress 
of the HSWP in 1985 also addressed this problem. Kadar twice 
spoke about the need to respect the rights, language, and cul- 
ture of national minorities and to allow them freedom of move- 
ment and contacts with their mother country. Kadar emphasized 



211 



Hungary: A Country Study 

that national minorities ought to act as a bridge between neigh- 
boring countries. 

In June 1987, at a meeting with a Romanian delegation headed 
by Emil Bobu, an RCP Politburo member and Central Committee 
secretary for party organization, Hungarian officials brought up the 
problem of Romania's treatment of its Hungarian population. Hun- 
gary maintained that Romania's treatment of Hungarians failed to 
comply with a 1977 agreement between Kadar and Romanian leader 
Nicolae Ceausescu to strengthen friendship and cooperation between 
the two peoples and to develop good relations between the two coun- 
tries. However, the two sides failed to reach an agreement on the 
minority problem. Hungary wanted Hungarians in Romania to be 
loyal citizens of that country but to preserve their language and cul- 
ture and be considered equals in "building socialism." Hungary 
agreed that the problem could be setded only by Romania. However, 
the Romanian report of the meeting failed to mention that the two 
sides had discussed the problem. 

Hungary took the unprecedented step of raising the minority 
issue at multilateral forums. In October 1985, Hungary addressed 
this problem at the Cultural Forum of the Conference on Security 
and Cooperation in Europe (CSCE). A representative of the Hun- 
garian delegation revealed that Hungary, Poland, the Soviet Union, 
and East Germany prepared a proposal "about the assertion by 
national minorities of their cultural rights" in which Romania and 
Czechoslovakia did not participate. More important, on Novem- 
ber 15 Marton Klein, a department head in the Ministry of For- 
eign Affairs, condemned the oppression of 3 million Hungarians 
in neighboring countries. He called for guarantees of the minori- 
ties' civil rights and for granting them specific collective rights to 
use their language to enable them to preserve and enhance their 
cultural traditions. 

In March 1987, at a closed session of the CSCE review confer- 
ence in Vienna, the Hungarian delegation supported proposals for 
protecting minority rights submitted by Yugoslavia and Canada. 
This action marked the first time a Soviet ally supported a Western 
proposal at a CSCE review conference. Hungary faced heavy pres- 
sure from its allies for this decision. In April, Hungary responded 
to Romanian criticisms of its "diversionary moves" and "nation- 
alist" and "chauvinist" practices. Rezso Banyasz, head of the 
Council of Ministers' Information Bureau, argued that the Roma- 
nian charges lacked foundation and damaged the basic interests 
of the Romanian and Hungarian peoples. 

Relations between Hungary and Romania further deterio- 
rated in 1988. Thousands of ethnic Hungarians (and some ethnic 



212 



Government and Politics 



Romanians) were fleeing from Romania to Hungary to escape 
Ceau§escu's political oppression. The National Assembly passed 
a resolution calling Romania's planned destruction of thousands 
of villages a violation of human rights. The razing of between 7,000 
and 8,000 villages and the relocation of their inhabitants were not 
directed at minorities as such, but the minorities would suffer the 
most because they would be scattered throughout the country and 
lose their national identities. In July tens of thousands of Hungar- 
ians demonstrated in front of the Romanian embassy in Budapest 
against the destruction of the villages. In response, Ceau§escu 
threatened to close the Romanian embassy, closed the Hungarian 
consulate in Cluj-Napoca, and blamed Hungary for the worsen- 
ing of relations. 

Grosz and Ceau§escu held an impromptu meeting in Arad, 
Romania, on August 28, 1988, to discuss relations between their 
countries. The talks lasted eight hours but failed to produce tangi- 
ble results. The joint communique did not mention the national- 
ity issue. Hungary later conceded that the two sides had made no 
progress on this problem. 

On November 14, 1988, relations fell to a new low when Roma- 
nian police arrested Karoly Gyorffy, the Hungarian commercial 
counselor, in Bucharest. The Romanians accused Gyorffy of using 
a stolen automobile, causing a serious accident, and distributing 
leaflets inciting public opinion against the authorities. On November 
19, Romania declared Gyorffy persona non grata and instructed 
him to leave the country within three days. Hungary rejected all 
accusations against Gyorffy and noted that this incident did not 
mark the first time that Romanian organs had hindered the work 
of its diplomats. On November 24, Hungary expelled Romania's 
political counselor. 

Czechoslovakia 

Since the formation in Slovakia (Czechoslovakia's eastern repub- 
lic) of a dissident organization for the defense of the rights of Hun- 
garians in 1979 and after frequent arrests of the Hungarian activist 
Miklos Duray, discrimination against the approximately 600,000 
ethnic Hungarians in Czechoslovakia became a problem in the re- 
lations between the two communist neighbors. As of 1986, about 
100 Hungarian activists had been arrested and imprisoned by 
Czechoslovak authorities. Other problems included the lack of 
Hungarian-language books and newspapers in Slovakia, discourage- 
ment of Hungarian-language training, and vandalism of Hungar- 
ian monuments and cultural offices. 



213 



Hungary: A Country Study 

In the late 1980s, as a result of pressure from Hungary, Czecho- 
slovakia attempted to redress some of the Hungarian minority's 
complaints. In 1986 the two countries concluded an agreement that 
called for Hungarian construction of a Hungarian cultural center 
in Bratislava, the capital of Slovakia. In 1987 the Cultural Associ- 
ation of Hungarian Workers in Czechoslovakia was allowed to re- 
join the Czechoslovak National Front, from which it had been 
expelled in 1972. Yet Czechoslovakia attempted to downplay the 
minority problem. In the communique issued following the meet- 
ing between Grosz and Czechoslovak prime minister Lubomfr 
Strougal in August 1987, Strougal mentioned the minority issue 
only in passing. By contrast, Grosz noted the role of minorities 
as a bridge between Hungary and Czechoslovakia and called for 
greater cultural contacts between the two countries. 

Another outstanding issue between Hungary and Czechoslovakia 
concerned the Gabcikovo-Nagymaros Dam project. In 1977 the 
two countries agreed to build this hydroelectric power and navi- 
gation system on the Danube River between Bratislava and 
Budapest. Hungarian public opinion strongly protested the project. 
Environmental activists in Hungary claimed that the project would 
severely damage the potable water supply, agriculture, and forests 
of both countries. Czechoslovakia has pressured the Hungarian 
government to proceed more quickly with the project. 

Yugoslavia 

In the late 1980s, approximately 430,000 Hungarians lived in 
Yugoslavia, primarily in the autonomous province of Vojvodina. 
In the late 1980s, relations between Hungary and Yugoslavia were 
good. After a December 1986 visit to Yugoslavia, Hungarian prime 
minister Gyorgy Lazar termed "exemplary" Yugoslavia's treat- 
ment of its Hungarian minority. Yugoslavia provided an adequate 
number of Hungarian-language schools on all educational levels 
to this minority. In addition, the Yugoslav government freely per- 
mitted the publication and dissemination of periodicals and 
newspapers in the Hungarian language. 

In other areas, bilateral ties developed remarkably well. Since 
the 1970s, Hungary has maintained governmental relations with 
the various republics of Yugoslavia. The two countries also under- 
took a variety of successful economic and scientific-technical ven- 
tures. In 1985 Hungary and Yugoslavia signed a trade agreement 
worth US$4.8 billion. In the late 1980s, each side expressed its read- 
iness to increase cooperation in culture, education, information ex- 
change, and sports. 



214 



Government and Politics 



Relations with the West 

In the 1970s and 1980s, the consensus between regime and so- 
ciety in Hungary called for political support for the regime in return 
for improvements in the standard of living and a loosening of re- 
gime controls over society. Hungary needed Western economic sup- 
port to raise its standard of living. Western economic support also 
entailed a modicum of political support. Hungary put out feelers 
to Austria as early as 1964 and sought to use that country — a per- 
manent neutral — as a bridge to the West. Subsequendy, the Hun- 
garians turned to West Germany, historically the country's most 
important trade partner in Central Europe. In the mid- to late 
1980s, Hungary has also sought to improve relations with Britain 
and the United States. In each case, Hungary wanted increased 
trade and cultural contacts. By contrast, in 1988 Hungary had only 
begun to cultivate relations with France, and economic and cul- 
tural contacts with that country therefore remained at a low level. 

Austria 

Since the mid-1960s, good relations between Hungary and Aus- 
tria have resulted from a number of factors. A common water sys- 
tem, including the Danube, the Drava, and the Mur rivers, together 
with countless smaller rivers and Lake Ferto (Neusiedlersee), meant 
each country's use of it affected the other country. Means of trans- 
portation, including road and railroad connections such as the 
Raba-Odenburger railroad line, also drew the countries together. 
Equally important, in the mid-1960s each country came to accept 
the permanence of the other's social system and attempted to find 
common areas of agreement despite political differences. Finally, 
in 1981 the two countries agreed that the border, which had earlier 
caused discord, no longer presented a problem. 

In the 1980s, economic relations between Hungary and Austria 
were quite strong. More than 100 cooperation agreements in areas 
such as machine-building, metallurgy, pharmaceuticals, agricul- 
ture, and light industry were in force between the two countries. 
In 1986 total trade between the two countries amounted to US$1 . 1 
billion. Hungary was Austria's fourth largest trade partner over- 
all, and Austria was Hungary's second largest Western trade 
partner. 

The two countries also cooperated considerably in culture, science 
and technology, sports, and other fields. The Hungarian Cultural 
Institute in Vienna organized an average of fifty events per year, 
and the Austrians operated their own cultural institute in Budapest. 
In 1987 the Hungarian- Austrian Friends Circle was established to 



215 



Hungary: A Country Study 

promote common cultural traditions and Hungarian interest in Aus- 
trian history and culture. In the late 1980s, the theme that the two 
countries shared "a special relationship" has recurred in both 
governments' commentaries on their political relations. The Hun- 
garian media also stressed the Central European identity and in- 
terests common to the two countries. 

West Germany 

Since the early 1970s, when the Four Power Agreement on Ber- 
lin and the Basic Treaty between East Germany and West Ger- 
many normalized West Germany's relations with the Soviet Union 
and East Germany, respectively, Hungary has greatly expanded 
its ties with West Germany. After West German chancellor Helmut 
Kohl's visit to Hungary in 1984, the Hungarian press stressed the 
special place of West Germany in Hungary's foreign policy and 
West Germany's efforts to reduce tension between East and West. 
Nepszabadsdg called Kohl "the patron of East- West relations." Over 
the course of the 1980s, political contacts and dialogue have been 
constant and frequent, despite problems in superpower relations. 

For Hungary, West Germany has served as an economic gate- 
way to the West. In the late 1980s, West Germany was Hungary's 
largest Western trading partner. As of 1984, 332 cooperation agree- 
ments linked the economies of the two countries. That same year, 
the two countries extended a ten-year agreement on economic, in- 
dustrial, and technical cooperation signed in 1974. In 1987 Hun- 
gary and West Germany signed a five-year agreement on scientific 
and technical cooperation. 

Cultural relations between the two countries also expanded. In 
1987 the two governments agreed to set up cultural and informa- 
tion centers in each other's country and concluded a visa agree- 
ment easing restrictions on Hungarians trying to enter West 
Germany. The West Germans also praised Hungary's treatment 
of its German minority and its policy of allowing ethnic Germans 
to resettle in West Germany. 

Britain 

To diversify support for its economic reforms, in the mid-1980s 
Hungary began to pursue relations with Britain. In 1984 Britain 
accounted for 4.3 percent of Hungary's exports to the West and 
5.2 percent of its imports from the West. In the mid-1980s, Hun- 
gary was able to increase its trade with Britain owing to Britain's 
recovery from its economic recession, the flexible price policy of 
Hungarian economic enterprises, and a more favorable interna- 
tional climate. 



216 




Crown of Saint Stephen, which the United States returned to Hungary in 1978 

Courtesy Gustav Forster 



Kadar paid an official visit to Britain in the fall of 1 985 . Accord- 
ing to British prime minister Margaret Thatcher, the two sides 
shared common ideas "with regard to peace, prosperity, and secu- 
rity." The two governments admitted that differences persisted, 
although they agreed to play a "useful role" in creating good re- 
lations between the Warsaw Pact and NATO. 

The good political climate facilitated the expansion of cultural 
relations. Hungary and Britain carried out bilateral cultural and 
scientific exchanges within the context of an agreement that was 
renewed every two years. In 1985 Glasgow held a five-week fes- 
tival of Hungarian culture. In addition, the British firm Perga- 
mon Press published an English translation of Kadar' s speeches 
and articles. 

United States 

Relations between Hungary and the United States began to warm 
in 1978 when the United States returned the Crown of Saint 
Stephen to Hungary (the crown had fallen into American hands 
after World War II). High-level political contacts took place rather 
frequently in the 1980s. Hungary benefited from these contacts be- 
cause the United States kept it abreast of the course of Soviet-United 



217 



Hungary: A Country Study 

States arms control negotiations. In 1986 Secretary of State George 
Shultz visited Hungary, and in 1987 Central Committee secretary 
Szuros visited the United States. In the summer of 1988, General 
Secretary Grosz paid a ten-day visit to the United States. 

Hungary has taken certain steps to improve its relations with 
the United States. The Department of State has reacted favorably 
to Hungary's efforts in the area of human rights. United States 
officials have also praised the introduction of market mechanisms 
in the Hungarian economy. 

In 1986 trade between Hungary and the United States amounted 
to US$345 million. The Hungarian government sought the renewal 
of most-favored-nation status on a three-year cycle rather than an- 
nually to facilitate planning in the foreign trade sector. During his 
visit in 1988, Grosz devoted most of his attention to economic mat- 
ters, seeking to encourage greater and more varied cooperation be- 
tween the two countries. The United States responded by allowing 
Hungary to open a trade bureau on the Pacific coast. 

Relations with Selected Non-Western Countries 

In the mid- to late 1980s, Hungary began to forge new economic 
and political relations with three countries that had long been ig- 
nored by most other countries in Eastern Europe. Hungary had 
broken off political relations with Israel in 1967, all but cut off re- 
lations with China as a result of the Sino-Soviet split, and neglected 
South Korea for fear of angering the communist Democratic Peo- 
ple's Republic of Korea (North Korea). Given the varying circum- 
stances of these countries, Hungary had different reasons for seeking 
to reopen relations with them, although in the case of all three coun- 
tries, economic relations figured prominently. The Hungarians 
sought to develop trade and commercial ties with Israel. Hungary 
and China shared an interest in economic and political reform. 
South Korea provided a key to opening Hungarian relations with 
the newly industrialized countries of the Pacific Basin. 

Israel 

On September 14, 1987, Israel and Hungary agreed to open in- 
terest sections with a maximum of five diplomats in each other's 
countries. The Hungarian interest section in Tel Aviv was to have 
been established at the Swedish embassy and the Israeli interest 
section in Budapest at the Swiss embassy. This low level of diplo- 
matic representation was to facilitate economic, trade, cultural, and 
humanitarian cooperation between the two countries and to help 
remove obstacles to consular relations. 



218 



Government and Politics 



In 1988 both Israeli foreign minister Shimon Peres and Israeli 
prime minister Yitzhak Shamir visited Hungary. Hungary desig- 
nated Shamir's visit as private to avoid offending Arab states. Hun- 
gary sought to use both visits to strengthen trade and cultural 
relations with Israel. Western observers regarded these high-level 
contacts as another step toward the reestablishment of full diplo- 
matic relations. 

China 

In the late 1970s, Hungary began working toward better rela- 
tions with China. Trade and economic relations began to expand 
in 1983, followed by the improvement of interstate relations 
and cultural ties. However, because of ideological differences, 
Hungarian-Chinese relations focused on economic ties. In 1985 
the two countries signed a long-term foreign trade agreement to 
expand bilateral economic and trade cooperation. The two coun- 
tries also agreed to exchange information on their economic re- 
form efforts. Imports from China rose from 0.6 percent of 
Hungary's total in 1984 to 1.8 percent of the total in 1986. Ex- 
ports to China rose from 0.8 percent of the total to 1.9 percent 
of the total in that same period. Hungarians participated in sev- 
eral Chinese industrial development and reconstruction programs. 

By 1982 both communist parties began to show an interest in 
resuming political relations. In 1985 the HSWP sent the Chinese 
Communist Party (CCP) the guidelines for its Thirteenth Party 
Congress. In return, the CCP sent a message to the "dear com- 
rades" of the HSWP, wishing the Hungarian people success in 
the building of socialism. 

Political relations intensified in 1987. In June Chinese premier 
and acting general secretary of the CCP Zhao Ziyang visited Hun- 
gary. Kadar's visit to China in October 1987 marked the resump- 
tion of party-to-party relations. The Chinese praised Hungary's 
reform program and called Kadar's visit "historic" because it sym- 
bolized a new era of friendship and cooperation between the two 
peoples. 

South Korea 

In February 1989, Hungary and South Korea agreed to estab- 
lish full diplomatic relations. Hungary thus became the first com- 
munist country to recognize South Korea. South Korea was one 
of the most developed countries in Asia, and the Hungarians sought 
South Korea's assistance in developing their economy. In addi- 
tion, Central Committee secretary Sziiros argued that economic 
ties to South Korea would facilitate the development of ties with 



219 



Hungary: A Country Study 

other countries of East Asia and the Pacific Basin and the increase 
of foreign economic assistance to develop Hungary's economy. 

Hungary and the Soviet Model 

Hungary's interest in economic reform prompted not only po- 
litical reform but also changes in its foreign policy stance. The re- 
gime found that successful economic reform required political 
reform to encourage greater popular participation in governmen- 
tal affairs and an increase in regime legitimacy. Thus, the regime 
took certain steps to expand political participation and to promote 
more individual freedom. Successful economic reform also neces- 
sitated changes in Hungary's relationship to the world economy. 
Hungary developed and diversified its relations with many Western 
countries and with several non- Western countries. Political reforms 
also encouraged Western countries, particularly the United States, 
to furnish economic assistance to Hungary. Domestic economic 
reform therefore provided the impetus for Hungary's willingness 
to emancipate itself, if only to a small degree, from both the Soviet 
political model and Soviet foreign policy tutelage. 

In 1989 monographs on Hungary's political system and foreign 
policy remained scarce. Hans-Georg Heinrich's Hungary: Politics, 
Economics, and Society presents an overview of the government, state, 
and party structures. Baruch Hazan's The East European Political 
System, although a general work, contains some useful information 
about Hungary. Peter Toma's Socialist Authority also provides mate- 
rial on the political system. For most aspects of government and 
politics, the interested reader is encouraged to turn to more spe- 
cialized works. Istvan Kovacs's "The Development of the Con- 
stitution of the Hungarian People's Republic" discusses the 
Constitution. Heinrich's Verfassungswirklichkeit in Osteuropa contains 
much material on the Presidential Council. Barnabas Racz's "Po- 
litical Participation and Developed Socialism: The Hungarian Elec- 
tions of 1985" is the best secondary source on the electoral system. 
George Schopflin's Censorship and Political Communication in Eastern 
Europe provides a perspective on the media. The best writings on 
foreign policy are the reports prepared by analysts at Radio Free 
Europe, particularly those by Alfred Reisch. In addition, an ac- 
count of Hungary's attempts to develop a new foreign policy role 
for itself is found in works by Gyula Jozsa. (For further informa- 
tion and complete citations, see Bibliography.) 



220 



Chapter 5. National Security 



Two soldiers, Esztergom, 1918 



THE HUNGARIAN PEOPLE'S ARMY (HP A) of the late 1980s 
comprised ground and air forces under the supervision of the Minis- 
try of Defense. The ground forces accounted for more than 77 per- 
cent of the total strength of the HPA, which in 1989 numbered 
slightly less than 100,000 troops. The armed forces that constituted 
the HPA were committed by treaty to the Soviet-East European 
alliance known as the Warsaw Pact. Another military force, the 
Border Guard, which patrolled the country's frontiers, was super- 
vised by the Ministry of Interior, as were the National Police and 
the Security Police. Hungary had no uniformed state security police. 
The Workers' Guard, a part-time force similar to a national guard 
was an arm of the Hungarian Socialist Workers' Party. The HPA 
and the Border Guard obtained manpower through a system of 
universal male conscription; service in the other organizations was 
voluntary. A small number of women also served in the armed 
forces in auxiliary roles but were not subject to conscription. 

Political changes in Hungary and the Soviet Union in the late 
1980s promised drastic changes in the HPA's relationship to the 
party and to the Warsaw Pact. Reformers proposed removing the 
national security forces from tight party control to reduce the likeli- 
hood that they would be used for domestic political coercion. The 
lessening of tensions in Europe had allowed the financially strapped 
Hungarian government to severely cut its military budget without 
fearing domestic or international reprisal. Both Soviet and Hun- 
garian officials spoke cautiously of the possibility of a politically and 
militarily neutral Hungary. In 1989 the Soviet Union had begun 
withdrawing a small portion of its 65,000 troops stationed in Hun- 
gary. Ironically, by the late 1980s many Hungarians viewed this 
withdrawal with dismay because they had begun to see the Soviet 
forces in their country as protection against an increasingly mili- 
tant Romania. 

Political liberalization also encouraged changes in the criminal 
justice system. Regime leaders promised to depoliticize the adminis- 
tration of justice and the police, although as of 1989 the apparatus 
of repression remained intact. However, harsh measures against 
dissent and public demonstrations, which had been taken as late 
as 1986, had stopped by 1989. 

Historical and Political Setting 

Hungary had a glorious military tradition in the Middle Ages. 
However, long resistance to the Ottoman Turks left Hungary weak, 



223 



Hungary: A Country Study 



and the country was eventually partitioned by the Turks and the 
Habsburgs in 1541. Thereafter — except for the period between 
World War I and World War II — Hungary's armed forces have 
been subject to those of an outside power, first the Habsburg im- 
perial army and then, after World War II, the Soviet-dominated 
Warsaw Pact. 

Hungary has played less of a role in the Soviet alliance system 
than the other Warsaw Pact countries except for Romania. It had 
the smallest army in the Warsaw Pact (see Glossary). Unlike the 
German Democratic Republic (East Germany) and Czechoslovakia, 
which border on the Federal Republic of Germany (West Ger- 
many), Hungary does not border on a member of the North Atlantic 
Treaty Organization (NATO). 

Historical Background and Traditions 

Since the Magyars' conquest of the Carpathian Basin in 896, 
Hungarians have had to be concerned about their national secu- 
rity. Twice in Hungary's history, a foreign invader killed nearly 
half of the country's population, and at other times Hungarians 
had to endure occupation by a foreign power seeking to destroy 
their national identity. For this reason, a military leader who deliv- 
ered the people, however temporarily, from foreign oppression be- 
came a hero. 

The Medieval Period 

Before the Magyar tribes conquered the Carpathian Basin in 896, 
they lived a seminomadic life on the Russian steppe (see Early His- 
tory, ch. 1). Their military organization and weaponry resembled 
those of various Bulgar- Turkish tribes who also inhabited the steppe 
at that time. Riding on swift steppe ponies, the Magyar horsemen 
used recurved bows for battie at long distance, and they used sabers, 
short lances, axes, and clubs for hand-to-hand combat. In the ninth 
century, Arab historians wrote that the Magyars could muster 
20,000 horsemen for battle. 

In the mid- to late ninth century, the Magyar tribes inhabited 
the territory lying to the north of the Black Sea between the lower 
Don and lower Dnepr rivers. From there they made armed forays 
against kingdoms to the west, first against the Bulgars on the lower 
Danube in 839 and then in 862 against Pannonia (see Glossary), 
which at that time was part of the eastern Frankish Kingdom. 

In the last decade of the ninth century, the Magyar tribes en- 
gaged in a series of military actions that culminated in their con- 
quest of the Carpathian Basin. From 892 to 894, they raided 
Moravia (in what is today the central part of Czechoslovakia) and 



224 



National Security 



Pannonia, gaining valuable knowledge about the fortified passes 
in the Carpathian Mountains, the natural defenses of their future 
homeland. In 894-95 three Magyar forces were operating in the 
Danube Basin — one allied with Byzantium against the Bulgars in 
the south, one allied with the Franks against Moravia in Pannonia, 
and a third that was invading what is now the Trans-Carpathian 
oblast in the Soviet Ukraine. With most of their armed men away 
in battle, the Magyars remaining in the Dnieper-Dnestr region 
could offer little resistance to the Pechenegs, a steppe people who 
attacked them from the east. Suffering great material losses, the 
Magyars on the steppe fled westward, through the Carpathian 
mountain passes, into their future homeland. 

Even though their conquest of the Carpathian Basin was not yet 
complete, in 899 the Magyars launched their first plundering ex- 
pedition against the rest of Europe. Terrorizing Europe for more 
than half a century, the Magyar raiders reached southern Italy, 
France, Spain, northern Germany, Greece, and even the gates of 
Constantinople. However, the raids against Western Europe ended 
when in 955 the Magyars suffered a disastrous defeat near Augs- 
burg (in Bavaria) against a coalition headed by the Holy Roman 
Emperor, Otto II. 

Hungary was one of the strongest military powers in Europe for 
nearly 250 years following its establishment as a kingdom in A.D. 
1000 (see Medieval Period, ch. 1). Engaging in small wars for either 
territorial or dynastic reasons, the country successfully resisted Ger- 
man and Byzantine attempts to meddle in its internal affairs. 
However, Hungarian armies could not stop the Mongols, who in- 
vaded the country in 1241. Although the attack was expected and 
the border fortifications reinforced, the Mongols easily swept 
through the Carpathian passes into the Danube Plain in March 
1241 . In April the Hungarian army met one of the Mongol armies 
in the area between present-day Leninvaros and Miskolc. The Hun- 
garian force was surrounded and totally annihilated at Mohi, but 
Hungary's King Bela IV managed to elude the Mongols and escape. 

The Mongol occupation was brief but devastating, wiping out 
at least half the population. The country soon recovered economi- 
cally but remained militarily weakened until the beginning of the 
fourteenth century. Charles Robert (1308-42), the first Anjou king 
of Hungary, required the nobles to maintain small armed units, 
or banderia, which served as a reserve force in addition to the no- 
bility and mercenaries serving in the royal army. This renewed 
military strength, combined with the fact that Hungary's neigh- 
bors were either militarily weak or preoccupied elsewhere, helped 
create a relatively peaceful Eastern Europe in the fourteenth 



225 



Hungary: A Country Study 

century. Even the increasing threat from the Ottoman Turks, start- 
ing in the 1360s, was successfully resisted during this time. 

The Modem Period 

In the fifteenth century lived Janos Hunyadi, perhaps the greatest 
Hungarian general of all time (see Renaissance and Reformation, 
ch. 1). Although Hunyadi fought, not always successfully, against 
the Turks several times in the 1440s, he is best known for his vic- 
tory against them near Belgrade in 1456. There the Hungarian 
forces decisively defeated the Turkish army and sent the sultan into 
flight. However, the Turkish wars, together with the petty strug- 
gles on the western borderlands, drained the national treasury, and 
increasingly heavy taxation and feudal obligations pushed the 
peasantry into a rebellion that was eventually crushed. The coun- 
try was economically weakened and racked by political instability, 
and its military might declined precipitously after the death of King 
Matyas Corvinus in 1490. 

The Ottoman Turks threatened to invade in the 1520s, but the 
Hungarian nobility seemed oblivious. The Turks successfully at- 
tacked Belgrade in 1521, and on August 29, 1526, met the small, 
poorly equipped Hungarian army at Mohacs. The Hungarian 
forces were nearly wiped out, and their king, Louis II, died in the 
rout. The Turks captured Buda in early September but then re- 
treated southward, loaded with captives, and having no intention 
of permanently occupying Hungary. However, the struggle between 
the Habsburgs and the Hungarian contenders for the Hungarian 
throne pulled the Turks deeper into Hungarian politics, leading 
to their military occupation of Buda in 1541 and the entire Hun- 
garian plain soon afterward. The Habsburg emperor was left with 
a strip of land in northeastern Hungary (called "Royal Hungary"), 
while Transylvania remained nominally independent under Tur- 
kish suzerainty (see fig. 3). The section of Hungary directly under 
Ottoman rule became a wasteland, as various Turkish military for- 
mations periodically looted and destroyed settlements, killing the 
inhabitants or selling them into slavery. 

In Royal Hungary, the Habsburgs constructed a system of for- 
tifications along the border with Ottoman Hungary during the 
seventeenth century. Many Hungarian nobles, having fled the Turk- 
ish zone of occupation, assumed military leadership of important 
sectors of this border zone. Their serfs were obliged to work twelve 
days annually on border fortifications, to perform military service, 
and to pay a military tax. Several Hungarian military leaders during 
this time achieved fame for their exploits. Miklos Znnyi's heroic 
stand against the Turks in 1564 and Istvan Bocskay's victory over 



226 



National Security 



the Habsburgs in Transylvania in 1604-05 were bright spots in 
the otherwise dismal military history of the Hungarians during the 
period of Ottoman occupation (see Partition of Hungary, ch. 1). 

The failed Turkish attack on Vienna in 1683 began a process 
of retreat that led to the Ottomans' being driven out of Buda in 
1686 and most of Hungary by the end of the century. The subse- 
quent Habsburg rule, however, proved to be just as cruel as that 
of the Turks, and resulted in an eight-year rebellion led by Ferenc 
Rakoczi (see Hungary under the Habsburgs, ch. 1). The Treaty 
of Szatmar (1711) ended this war, during which half a million Hun- 
garians died. 

During the eighteenth century, the Habsburg Hofkriegsrat (see 
Glossary) in Vienna directly controlled the Hungarian army, which 
was created in 1715. The Palatine (see Glossary) was commander 
in chief of the armed forces in Hungary, but the Habsburgs deliber- 
ately left the office vacant. Responsibility for recruitment and supply 
was assumed by the Hungarian Viceregal Council, located in 
Pozsony, the capital of Royal Hungary (present-day Bratislava in 
Czechoslovakia), until 1785 and then transferred to Buda. 

During the first half of the eighteenth century, the Habsburgs 
established a Hungarian standing army made up of six high com- 
mands: one for Hungary proper and the others for Croatia, Slavo- 
nia, Transylvania, the Banat (in southern Hungary), and the 
Military Frontier Zones (located in Croatia). The Hungarian stand- 
ing army was supported by war taxes paid by the counties and 
towns. Soldiers were supposed to serve for life but were usually 
discharged after twenty years of service. This term was reduced 
to ten years in 1830. Until 1840 soldiers were forced into service 
by press gangs; later they were selected by lot. 

In 1790 the Hungarian nobility revolted against the Habsburgs 
in an attempt to restore former feudal privileges and Hungarian 
autonomy. A separate Hungarian army was formed from the 
banderia, but it was dissolved when the Habsburgs managed to avoid 
war with Prussia and thus were able to redirect their imperial forces 
toward Hungary. 

Hungarian soldiers fought in the Habsburg army during the wars 
against France from 1792 to 1815. Except for a small battle at Gyor 
in 1808 — which the French won — no military action took place on 
Hungarian soil. Nevertheless, the Hungarian troops suffered more 
than 150,000 casualties during these wars. 

The revolution that broke out in Vienna in 1848 — part of a wave 
of revolts that swept across Europe that year — caused enough dis- 
ruption in the imperial government to allow the Hungarian nobil- 
ity to seize more political autonomy for Hungary. After quelling 



227 



Hungary: A Country Study 

the revolt in other parts of the empire, the Habsburg government 
in September 1848 sent forces into Hungary under Josip Jelacic, 
the Habsburg governor of Croatia. Jelacic 's army was met by a 
hastily formed Hungarian army and was driven out of the coun- 
try. The government in Vienna attacked again in the late fall and 
even occupied Pest in early December. In the spring, however, 
these Habsburg forces were driven out by a Hungarian army under 
a young major, Artur Gorgei, while another Hungarian army, 
under General Jozef Bern, drove the Habsburg forces out of Tran- 
sylvania. Nevertheless, in June 1849 the Russian army came to 
the rescue of the Habsburgs and invaded Hungary through the 
Carpathian Mountains. Outnumbered and outgunned, Bern's small 
army was defeated in August, and Gorgei surrendered his forces 
to the Russians shortly afterward. The revolt was crushed and its 
leaders hanged, although Lajos Kossuth, the leader of the revolu- 
tionary government, escaped to the Ottoman Empire. 

Although the Compromise of 1867 establishing the Dual Monar- 
chy of Austria-Hungary gave each country separate parliaments 
and separate governments, the Hungarian military forces remained 
under centralized Habsburg control (see Dual Monarchy, ch. 1). 
Thus, Hungarian soldiers, together with the other troops of na- 
tions under the Habsburg monarchy, found themselves mobiliz- 
ing for war in the summer of 1914, first against Serbia and then 
against Serbia's ally, Russia. The largest Hungarian army in his- 
tory fought under the imperial flag on the side of the Central 
Powers. 

The Military in Trianon Hungary 

Hungarian independence came in 1918, when the Habsburg Em- 
pire's disintegration gave not only the Hungarians but also the em- 
pire's other nationalities the opportunity to establish sovereign 
states. Hungarian soldiers, scattered among the Habsburg troops 
at various places within and outside the empire, were ordered home 
by the government of Mihaly Karolyi in the fall of 1918. They found 
their country racked by political and economic strife. Hungary could 
not resist the Romanian army's advance to Budapest but did drive 
the Czechs out of northern Hungary (present-day Slovakia). 
However, the Treaty of Trianon signed in June 1920 pushed the 
Hungarian army back close to the present-day boundaries (see 
Trianon Hungary, ch. 1). Moreover, the Treaty of Trianon limited 
Hungary's military forces to 35,000 soldiers. 

Motivated by a desire to regain lands lost as a result of the Treaty 
of Trianon, Hungary allied itself with Italy in the late 1920s and 
with Germany during the 1930s. Diplomacy and alliances, rather 



228 



Liberation Monument on 
Gellert Hill in Budapest 
Courtesy 
Sam and Sarah Stulberg 




than military action, brought about the return of some former Hun- 
garian lands in 1938-39. Hungary participated in the German in- 
vasion of the Soviet Union in June 1941 by committing a small 
force to aid in the German occupation of the Ukraine. After Janu- 
ary 1942, however, the Hungarian army was thrown into the front 
lines with the Germans. Underequipped (one machine gun was 
allotted for every kilometer of front line) and lacking warm cloth- 
ing and fuel, this army suffered about 200,000 casualties at the 
battle of Stalingrad during the winter of 1942-43. This defeat, com- 
bined with the Soviet rollback of the German invasion, quickly 
turned Hungarian public opinion against the war. Many Hungarian 
prisoners of war fought on the side of their Soviet captors or were 
sent as partisans behind the Axis lines in southeastern Europe. Tired 
of the half-hearted Hungarian war effort, the Germans occupied 
Hungary in March 1943. Admiral Miklos Horthy, the Hungar- 
ian regent, attempted to negotiate an armistice with the Allies in 
the fall of 1944. Horthy was soon arrested by the Germans, but 
by then the Red Army had already entered eastern Hungary. The 
Red Army captured Budapest in December and pushed the Ger- 
mans completely out of Hungary by early April 1945. 

Sovietization 

By the end of World War II, the public had little respect for the 
army because the war had been lost and the territory that had been 



229 



Hungary: A Country Study 

reincorporated after 1938 was given back to Czechoslovakia, Roma- 
nia, and Yugoslavia. Soviet officers believed Hungarian army 
officers to be as guilty as their German counterparts and, because 
of the undistinguished performance of the Hungarian army dur- 
ing the war, the Soviets had no respect for Hungary as a military 
force. The communists distrusted the former army officers, and 
these officers hated the communists. After the Hungarian People's 
Republic was established in 1949, many of these officers were 
punished and often sent to the harshest labor camps (see Postwar 
Hungary, ch. 1). 

The postwar Hungarian army developed out of divisions put 
together to fight Germany after Hungary had made peace with the 
Allies in December 1944. Under Soviet pressure, however, the army 
was quickly demobilized in 1946, and most officers were removed 
because of pro-Western or anticommunist sympathies. A new force 
was then created under an independent command controlled by 
the Hungarian Communist Party, and a new army — the Hungar- 
ian People's Army — officially emerged in 1948. The military clause 
of the peace treaty that Hungary signed with the Allies permitted 
it to have an army of 65,000 troops and an air force of 5,000 per- 
sonnel and ninety aircraft. 

According to American expert Ivan Volgyes, Mihaly Farkas, 
the minister of defense from 1948 to 1953, served as the chief ar- 
chitect of the new Hungarian People's Army. Following Soviet 
orders, Farkas, himself an avowed Stalinist, set out to imitate the 
Soviet army and to Sovietize the Hungarian army. The HPA's 
organization mirrored that of the Soviet army. Its uniforms, ranks 
and insignia, decorations, and "general privileges" were all based 
on the Soviet model, as was the "dual command system," whereby 
the party attached political commissars to each military commander 
to ensure the political reliability and ideological commitment of 
the troops. These political officers were assigned by the Ministry 
of Defense's Main Political Administration (see Glossary) and were 
given instructions by the Administrative Department of the 
Secretariat of the Hungarian Workers' Party (HWP — on Novem- 
ber 1, 1956, renamed the Hungarian Socialist Workers' Party — 
HSWP). Although this dual command system was still in effect 
in the late 1980s, it placed the most restrictions on military com- 
manders in the period between 1949 and 1955. 

Soviet influence further increased when, starting in November 
1948, hundreds of Soviet military "advisers" were assigned to the 
Hungarian army at all command levels down to the regimental 
one. Although theoretically acting only as advisers, they influenced 
all important decisions. Beginning in December 1948, thousands 



230 



Budapest, site of start of 1956 uprising 
Courtesy Gustav Forster 



of Hungarians began attending Soviet military and political acade- 
mies to gain technical expertise and political indoctrination. Hun- 
garian generals were sent to Soviet general staff schools (see Soviet 
Influence, this ch.). 

The regime managed to create a communist officer corps by ac- 
tively recruiting workers and peasants into the higher ranks of the 
military. By 1954 a little more than half of the officers were chil- 
dren of manual laborers, while about one- third came from peasant 
families. The officer corps provided upward mobility for the former 
"underclass," while providing material benefits in a country where 
standards of living were low compared with those of Western 
Europe. 

State Security Forces and the Revolution 

Ironically, by the time the HPA had become thoroughly Sovi- 
etized, the first waves of de-Stalinization rippled through the Hun- 
garian Workers' Party. In 1953 the Stalinist party leader, Matyas 
Rakosi, lost his position as prime minister, and the Stalinist minister 
of defense, Mihaly Farkas, fell from power. Professional training 
for officers was instituted at the military academies. A better edu- 
cated and increasingly professional officer corps began to question 



231 



Hungary: A Country Study 

the dogmatic teachings of the party. Tension arose when the "in- 
ternationalism" (a euphemism for following the Soviet line in for- 
eign and military policy) stressed by the communist state clashed 
with the latent nationalism of the officers. These officers also re- 
sented special privileges bestowed on both the State Security Depart- 
ment (Allamvedelmi Osztaly — AVO — the name for the pre- 1956 
secret police) and the Soviet officers in the country. 

Although the HPA did not participate in the Revolution of 1956 
as an organized force, its role in that conflict demonstrated its po- 
litical unreliability to both the regime and the Soviet Union (see 
Revolution of 1956, ch. 1). Organized military support for the revo- 
lution did not occur for two reasons. First, before being sent home 
on October 28-29, the Soviet military advisers in Hungary ordered 
various sections of the Hungarian army to disperse. Second, Prime 
Minister Imre Nagy refused to order the HPA to oppose the final 
Soviet invasion that took place on November 3. However, not only 
did conscripts refuse to fire on mass demonstrations that took place 
on October 23 (although the AVO forces did), but some even went 
over to the insurgents and supplied them with weapons. Suppos- 
edly "politically reliable" cadets from military academies likewise 
joined the insurgents, as did some military officers. One of the most 
important military figures to join the revolutionaries was Colonel 
Pal Maleter, the commander of an armored unit sent to recapture 
the Kilian barracks in Budapest from the Freedom Fighters. In 
a parley with the insurgents, Maleter became convinced that they 
"were loyal sons of the Hungarian people," and he joined them. 
Maleter eventually became minister of defense in the Nagy govern- 
ment; he was later tried and executed with Nagy in 1958. 

The regular police, at least those in Budapest, were likewise sym- 
pathetic to the insurgents. On October 24, Sandor Kopacsi, chief 
of the Budapest police, gave orders to supply the revolutionaries 
with weapons. Budapest police joined the rebels but did not fight 
the Soviet army. Police headquarters then became headquarters 
for revolutionary forces. 

Many members of the dreaded AVO, by contrast, fell victim 
to the public's wrath. During the revolution, AVO recruits deserted, 
and its professional officers found themselves hunted down by mobs. 
Some lynchings occurred. The regular police helped disarm the 
security police, and those security police known to have commit- 
ted acts of state terror against the citizenry were taken into cus- 
tody to await trial (some were summarily executed). Most AVO 
officers were detained by the revolutionary government, which 
abolished the security police on October 29. At first, Moscow sought 
to suppress the insurgency with the forces at hand. Soviet armored 



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National Security 



units began arriving in Budapest in the early morning of October 
24. For the next four days, they fought intermittently with the in- 
surgents. They were unable to dislodge Hungarian army units in 
the Kilian barracks that were under the leadership of Colonel 
Maleter or the units near the Corvin Cinema. Soviet forces and 
advisers publicly withdrew from Budapest on October 28. On the 
surface, it seemed as through the revolt was victorious. 

On October 30, the government formed the Revolutionary Com- 
mittee of the Armed Forces, with representatives from the army, 
police, and the Freedom Fighters. The following day, the appoint- 
ment as its head of General Bela K. Kiraly, who had been impris- 
oned from 1951 to 1956, was announced. On November 1, 1956, 
Hungary withdrew from the Warsaw Pact and declared political 
neutrality. This act was in response to reports of the Soviet army's 
entering the country in force on October 31. 

The Soviet army began pouring into Hungary on November 1 
and proceeded to occupy airfields and other strategic points in the 
country. The invasion used 120,000 soldiers taken from eleven fully 
staffed, "category-one" (forces of three-quarters' to full strength) 
divisions in Romania and the Ukraine. Volgyes believes that the 
coordinated nature of the attack and the positions taken by Soviet 
units suggest that the Soviet Union had planned the invasion far 
in advance. 

The Soviet army returned to Budapest in force on November 4. 
The HP A, still splintered and riddled with pro- Soviet officers, could 
not offer organized resistance. The Freedom Fighters had neither 
the manpower nor the ammunition to oppose the Soviet army for 
long. After the fighting stopped, the Soviet authorities began to 
round up suspects, disarm the Hungarian People's Army, and carry 
out summary executions. In the next few years, the Hungarian 
courts handed down an estimated 2,000 death sentences, primar- 
ily to street fighters. 

The Postrevolutionary Period 

The HPA underwent a purge after the revolution. Officers were 
required to sign a declaration condemning the revolution, prais- 
ing Hungarian- Soviet "friendship," and pledging allegiance to the 
new government of Janos Kadar. Nearly 20 percent of the officer 
corps refused to sign the declaration, even under threats, and were 
expelled from the army. In the year following the revolution, the 
army was reorganized under Soviet supervision, with increased 
power given to the political commanders. However, in order to 
assuage public opinion, the official mission of the army changed 
from "defending socialism" to defending Hungary. 



233 



Hungary: A Country Study 

The HPA became an integral part of the Warsaw Pact forces 
in 1957 but did not participate in pact military exercises until 1962. 
The HPA participated, although reluctantly, in the Soviet-led 
Warsaw Pact invasion of Czechoslovakia in August 1968. In 1989 
the Hungarian government revealed that the HPA participated in 
the invasion because the Kadar regime feared that failure to do 
so would have halted Soviet exports of raw materials to Hungary. 

Through the late 1980s, the HPA and Soviet troops held joint 
exercises on Hungarian soil twice a year, and Hungarian forces 
participated in exercises held on the territory of other Warsaw Pact 
countries. Rarely, however, did forces from the other Warsaw Pact 
nations conduct military exercises in Hungary. 

Government and Party Control 

Ultimate responsibility for defense policy lay with the HSWP 
Politburo (see Party Structure, ch. 4). The party exercised several 
channels of control over the armed forces. The party officially con- 
trolled the army through the Government Administration and 
Administration Department of the Secretariat. The head of the 
Ministry of Defense's Main Political Administration reported to 
this party body and to the minister of defense. The Main Political 
Administration, in turn, controlled the political departments at the 
division level and the political deputies of the commanding officers 
at the subdivision level. Party cells were subordinated to the deputy 
commanders for political affairs. The Army Committee of the Cen- 
tral Committee of the HSWP supervised overall political work in 
the army. 

During peacetime the Presidential Council, whose members were 
subject to the HSWP's nomenklatura (see Glossary) authority, over- 
saw national defense; the defense committee of the National 
Assembly also worked closely with the Presidential Council (see 
State Apparatus, ch. 4). At the government level, the Council of 
Ministers' Committee of Defense supervised the defense commit- 
tees of Budapest and those of the counties. The minister of defense 
was a member of the defense committees of both the Council of 
Ministers and the National Assembly in peacetime. During war- 
time, the president would transform the Presidential Council into 
the National Defense Council, with the minister of defense lead- 
ing the war effort. 

In theory the Presidential Council appointed and dismissed 
officers, but in fact this responsibility was assumed by the minister 
of defense. The minister of defense had always been a member of 
the Central Committee of the HSWP, the highest ranking officer, 
and the commander in chief of the armed forces. He reported to 



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National Security 



the chairman of the Council of Ministers and to the HSWP Polit- 
buro in peacetime. In late 1989, Hungary's minister of defense 
was Colonel General Ferenc Karpati, who was appointed in De- 
cember 1985 upon the death of his predecessor, Colonel General 
Istvan Olah. Karpati had joined the Hungarian Communist Party 
in 1945 at age nineteen. His chief of staff was Lieutenant General 
Jozsef Pacsek. At the same time, Brigadier General Istvan Bracsok 
served as secretary of the HSWP's People's Army Committee, while 
Lajos Krasznai served as chief of the HPA's Main Political Ad- 
ministration. 

Party membership was essential for career advancement in the 
military; hence, party membership among officers was high; ac- 
cording to Karpati it was 80 percent in 1989. This high level of 
party membership among officers was another means of party con- 
trol over the military. The party began recruiting prospective 
officers in the military academies, where students underwent a 
screening process to assess their political reliability. 

By contrast, party membership among enlisted men and non- 
commissioned officers (NCOs) was relatively low. Estimates placed 
party membership at 0.5 to 0.8 percent of those persons drafted, 
compared with about 4 percent for the general population of the 
same age. In the late 1980s, however, party membership was seri- 
ously declining, and it can safely be assumed that the percentage 
of HSWP members among the military rank and file was drop- 
ping as well. 

Expenditures 

The military budget underwent a series of reductions in the late 
1980s because of the country's worsening economic problems. The 

1987 estimated military budget, based on Ministry of Finance in- 
formation, was US$867 million (40.745 billion forints). The 1989 
budget was cut to US$576 million (40.3 billion forints) even be- 
fore January 1, 1989. The proportion of the military budget devoted 
to the acquisition of new technology dropped from 32 percent in 

1988 to 16 percent in 1989. From 1980 to 1985, this proportion 
had averaged about 50 percent of the military budget. 

In the late 1980s, the Soviet Union and other Warsaw Pact coun- 
tries expressed displeasure with the relatively low Hungarian defense 
budget, but this pressure did not induce the Hungarians to increase 
the percentage of the gross domestic product (GDP — see Glossary) 
devoted to defense. Only Romania spent a smaller percentage of 
GDP on national defense than Hungary, but in absolute numbers 
Hungary's outlay was the smallest in the Warsaw Pact. 



235 



Hungary: A Country Study 

By contrast, the funds spent by the government for armed forces 
subject to the Ministry of Interior and the Workers' Guard increased 
by nearly 22 percent from 1987 to 1988 and by nearly 24 percent 
from 1988 to 1989. Much of this increase, however, was expected 
to be canceled out by inflation and price reform. 

The budget for the defense and interior ministries had to be ap- 
proved by the defense committee of the National Assembly, a body 
that managed to increase its power during the late 1980s. Neverthe- 
less, in 1989 the committee once again approved the state budgets 
for the ministries of defense and interior and, for the first time, 
the Workers' Guard, without inquiring about how the money was 
to be spent. 

Military Industry 

In the late 1980s, the government's defense industry produced 
only a small amount of the HPA's needs. Major weapons were 
obtained from the Soviet Union. Communications and instrumen- 
tation equipment made up about three-quarters of the country's 
military production, while artillery and infantry weapons and am- 
munition made up another 12 percent. The production of vehicles 
and aviation components contributed about 8 percent, while chem- 
icals and light industrial products formed the remaining 5 percent. 

In early 1989, military industries anticipated a 31 -percent decline 
in production compared with the previous year because of the 
slashed military budget and a drop in exports. Factories that 
produced mostly military equipment were expected to be hard hit. 
Military orders, mostly long-range microwave equipment and 
accessories, made up about 80 percent of the production of the Pre- 
cision Mechanics Enterprise. Military orders for handguns made 
up 35 percent of the Weapon and Gas Appliance Factory's produc- 
tion and 25 percent of the orders for the Diosgyor Engineering Fac- 
tory. The Machine Factory at Godollo, which produced components 
for military vehicles and tanks and repaired army equipment, was 
owned by the Ministry of Defense and operated by soldiers. In Janu- 
ary 1989, it was operating at 50 percent of capacity because orders 
from the other Warsaw Pact countries dropped by 50 percent and 
a cut in sales to the HP A was anticipated. The military produc- 
tion of the Videoton telecommunications factory, valued at US$132 
million in 1988, was expected to fall to US$84.9 million in 1991, 
and more than 2,000 of its 7,000 workers were expected to be 
released, resulting in a 40-percent idle manufacturing capacity. The 
effects of cutbacks in military procurement on the euphemistically 
named "Lamp Factory" (Lampagyar), which produced pistols and 



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National Security 



automatic rifles, and the Danuvia Factory, which manufactured 
machine guns, was not known. 

Soviet Influence 

In the late 1980s, Soviet influence on Hungary's HPA was ex- 
ercised in two ways. Numerous organizational ties linked the Soviet 
military with Hungary's armed forces. An equally important in- 
fluence was the fact that a major component of the Warsaw Pact's 
military forces — the Southern Group of Forces — was stationed in 
Hungary. 

Loyalties and Control 

Soviet leader Nikita S. Khrushchev (1953-64) once said that the 
Soviet government had never trusted the Hungarian army. Despite 
the training that Hungarian officers had received from the Soviet 
military since 1948 and the Soviet infiltration of the HPA's top 
command structure, the Revolution of 1956 confirmed Moscow's 
apprehensions. The events of 1956 threw the loyalty of even the 
top Hungarian military elite into question. 

In the 1980s, Soviet influence on Hungarian military officers 
was much greater among the upper-level officers than among lower- 
level officers, regimental sergeants major, or NCOs (see Uniforms 
and Rank Insignia, this ch.). The higher-ranking officers saw their 
careers tied to Hungary's association with the Soviet Union and 
the Warsaw Pact, while those of lesser ranks saw Soviet troops in 
Hungary as an army of occupation. 

The Soviet Union exerted its military influence within Hungary 
in a variety of ways. The obvious means were official ministry-to- 
ministry contacts and the presence of Soviet troops in the coun- 
try. In addition, the chief Soviet representative of the Warsaw 
Treaty Organization in Hungary exercised day-to-day control of 
both the Soviet army and the Hungarian People's Army. Also, the 
Soviet military attache and staff in the Soviet embassy maintained 
a liaison office with the HSWP Central Committee's Government 
Administration and Administration Department, the Ministry of 
National Defense's Main Political Administration, and the Cen- 
tral Committee of the HPA's party organization. And, finally, the 
representative and staff of Soviet military intelligence met frequently 
with various military and political authorities. 

Nevertheless, the HPA was hardly a pawn of the Soviet mili- 
tary establishment. During the 1980-81 crisis in Poland, the Hun- 
garian military leadership received instructions from the HSWP 
not to intervene in Poland without orders from the party. This order 
emanated not only from a purportedly sovereign government's 



237 



Hungary: A Country Study 



desire to retain control over its own military but also from a deter- 
mination to maintain civilian control over the military. 

In the late 1980s, the HPA also pressed for ''more democracy" 
in Warsaw Pact decision making. This term justified requests for 
giving Hungary and other non- Soviet members a greater voice in 
decision making within the pact and for rotating the command of 
the Warsaw Pact forces among all the military leaders of the non- 
Soviet Warsaw Pact (NSWP) countries. 

Soviet Southern Group of Forces in Hungary 

Soviet troops have been stationed in Hungary since April 1945, 
when they pushed the German army completely out of the coun- 
try. After Hungary signed a peace treaty with the Allies in 1947, 
Soviet forces remained in order to secure lines of communication 
with Soviet troops occupying Austria. Soviet forces withdrew from 
Austria in May 1955 but remained in Hungary at the request of 
the High Command of the Warsaw Treaty Organization, which 
was formed one day before the Austrian treaty was signed. 

In May 1957, the Soviet-installed government under Kadar 
signed an agreement with the Soviet Union to legally recognize 
the Soviet forces that had occupied the country in 1956 (see Revo- 
lution of 1956, ch. 1). Called the Decree Having the Force of Law 
No. 54 of 1957, it justified the Soviet presence as a defense against 
NATO "aggression" and West German rearmament. The agree- 
ment mentioned no specifics, such as the number of Soviet troops, 
their deployment within Hungary, and the facilities made avail- 
able to them, although such items may have been written down 
in a secret protocol. The version of the agreement made public men- 
tioned only that the Soviet troops were to be stationed "indefinitely" 
and that the compact could be changed only by mutual consent. 

Officially called the Southern Group of Forces (SGF), Soviet 
troops in Hungary numbered 65,000, according to NATO esti- 
mates made in November 1988. At that time, the troops were under 
the command of Lieutenant General Aleksei A. Demidov. The 
Soviet forces in Hungary corresponded strategically to the Group 
of Soviet Forces stationed in East Germany, the Northern Group 
of Forces in Poland, and the Central Group of Forces in Czecho- 
slovakia. 

The SGF, headquartered in Budapest, commanded the 13th 
Guards Tank Division in Veszprem, the 2d Tank Division in 
Esztergom, the 253d Motor Rifle Division in Szekesfehervar, and 
the 93d Guards Motor Rifle Division in Kecskemet. These forces 
were supported by an air assault brigade, five fighter regiments, 
two fighter- ground attack regiments, several combat helicopter 



238 



National Security 



units, and reconnaissance aircraft. In a war against NATO, the 
SGF and the Hungarian troops would be used as part of the South- 
western Theater of Military Operations (teatr voennykh deistvii — 
TVD). 

In December 1988, Soviet leader Mikhail S. Gorbachev an- 
nounced that the Soviet Union would unilaterally remove some 
of its forces from Eastern Europe. This force reduction, which began 
in April 1989, was to be carried out over a two-year period. It would 
include the tank division deployed at Veszprem and the surrounding 
area, an armored training regiment, a paratroop battalion and in- 
terceptor squadron based at Tokol airport in Pest County, a chem- 
ical defense battalion, and the SGF training school for NCOs in 
Szolnok. This partial withdrawal would remove 450 tanks; 200 
guns, trench mortars, and mine throwers; 3,000 vehicles; and 
10,400 of the 65,000 Soviet troops in Hungary. In April 1989, Hun- 
garian foreign minister Gyula Horn said that all Soviet soldiers 
might be removed from the country in the first half of the 1990s. 

The Soviet troops were generally isolated from Hungarian life. 
They did not interfere in Hungarian affairs and appeared in pub- 
lic usually in small groups and only in certain restricted areas. The 
Hungarians generally did not like the Soviet soldiers and did not 
fraternize with them. 

External Threats to National Security 

In the late 1980s, Hungary's defense policy was in a state of flux. 
The government no longer stressed the possibility of a NATO at- 
tack, nor did it consider likely a Soviet intervention to halt Hun- 
gary's march toward reform. In fact, spokesmen for both Hungary 
and the Soviet Union publicly alluded to a possible withdrawal of 
Hungary from the Warsaw Pact and the proclamation of neutral- 
ity for Hungary such as that enjoyed by Finland and Austria. But 
both sides spoke cautiously about this possibility, and the Hun- 
garian government stressed that it did not wish to pursue neutral- 
ity at the risk of upsetting the balance of power in Europe. 

Threat from the North Atlantic Treaty Organization 

Traditionally, Hungary's role in the Warsaw Pact had been to 
follow the Soviet lead on matters of national and bloc defense. But 
even during the early and middle 1980s, when member countries 
of the North Atlantic Treaty Organization (NATO) began install- 
ing intermediate-range ballistic missiles in Western Europe in 
response to the installation of Soviet SS-20 missiles in the western 
portion of the Soviet Union, the attitude of the Hungarian govern- 
ment toward the West was never as rabidly vehement as that 



239 



Hungary: A Country Study 



displayed by the governments of Czechoslovakia or East Germany 
(see Principles of Foreign Policy, ch. 4). In fact, the Soviet Union 
had criticized Hungary for not spending enough on its military 
and for stressing defense of the country (honvedelem) instead of 
defense of the countries of the Warsaw Pact. 

Western analysts speculated about Hungary's military role in 
a Warsaw Pact conflict with the West. Hungary does not border 
any NATO country and therefore was not in the front line of 
Warsaw Pact troop deployment. It was seen to play a supporting 
role, primarily by supplying military engineering support and some 
antiaircraft defense. In a war with NATO, Hungarian forces would 
either be used in the Warsaw Pact's Western Theater of Military 
Operations against West Germany or in the Southwestern Thea- 
ter of Military Operations against NATO's southern flank. In both 
scenarios, Hungarian forces would have to enter the territory of 
neutral countries. For instance, Yugoslavia's neutrality might be 
breached to project Soviet and Warsaw Pact power in the Mediter- 
ranean. Hungarian military engineering support would prove cru- 
cial in such a campaign. 

Threat from Romania 

During the 1980s, the Hungarian government broke its silence 
about Romania's oppression of its Hungarian minority, number- 
ing about 2 million to 2.2 million people (see Relations with Other 
Communist Neighbors, ch. 4). Under Soviet pressure and for the 
sake of socialist solidarity, the Hungarian government had refrained 
from criticizing Romania, but increasing domestic pressure forced 
it to act. 

As the war of words between the two countries heated up, so 
did the potential for armed conflict. In July 1989, Der Standard, pub- 
lished in Vienna, reported that a secret meeting of the Hungarian 
state and party leadership had taken place in November 1988 in 
which the military was asked to assess the strategic balance between 
Hungary and Romania. The resulting report, published in Febru- 
ary 1989, revealed Hungary's "striking military inferiority." Hun- 
gary had no fortifications on its border with Romania, and in a 
private meeting Romanian leader Nicolae Ceau§escu allegedly 
warned Karoly Grosz, Hungary's party leader, not to install such 
defenses. During the summer of 1989, Hungarian diplomats hinted 
at fear of attack by Romania. Der Spiegel, published in Hamburg, 
reported in July 1989 that Hungary felt threatened by the Condor 
intermediate-range missiles that Romania had acquired with "Ger- 
man and Argentine help." At a July 1989 Warsaw Pact meeting 
in Bucharest, Ceau§escu was said to have threatened Hungary with 



240 



National Security 



war, although representatives of both countries agreed that steps 
had to be taken to stem the rising tension. Ironically, by this time 
the Hungarian opposition had stopped insisting that Soviet troops 
leave the country because they were seen to be the country's main 
protection against Romania. 

Threat from the Soviet Union 

From the mid- 1940s through the mid-1980s, the threat of a Soviet 
invasion prevented the other Warsaw Pact countries from deviat- 
ing from Moscow's prescribed domestic and foreign policies. The 
Soviet invasion of Hungary in 1956 demonstrated that Moscow 
would act if it believed that changes in that country threatened the 
security of the Warsaw Pact or the leading role of the communist 
party in Hungary. After economic reforms began in the 1960s, 
Hungary's government and party leaders were careful to take Soviet 
sensitivities into account. However, in the late 1980s, Moscow 
showed that it was sympathetic rather than hostile to reforms within 
Hungary, thus lessening the chances of a Soviet invasion. 

The Hungarian Armed Forces 

Compared with the other countries in the Warsaw Pact, in the 
late 1980s Hungary had the smallest army and air force, as well 
as the fewest artillery pieces, light armored vehicles, and antiair- 
craft weapons. It ranked last, along with Bulgaria and Romania, 
in the number of military helicopters, and only Romania had fewer 
tanks. In addition to lagging behind its Warsaw Pact allies quan- 
titatively, the quality of its military equipment was decidedly "mid- 
dle level," according to Volgyes. As of mid- 1988, the military did 
not possess modern Soviet T-84 tanks, MiG-29 fighter aircraft, 
or the new Soviet 5.48mm infantry weapons. Western analysts have 
claimed that the Hungarian military forces had the lowest combat 
readiness in the Warsaw Pact and were one of the non- Soviet 
Warsaw Pact military forces least trusted by Moscow. The HPA's 
military construction branch was the only section of the armed forces 
held in high regard by all observers. 

Of approximately 100,000 personnel on active duty in the HPA 
in 1988, about 64,000 were conscripts. During a national emer- 
gency, Hungary could mobilize about 900,000 trained men. 

Ground Forces 

In 1989 about 77,000 troops served in the ground forces (com- 
monly referred to as the army), and about 45,000 of them were 
conscripts. As in other Warsaw Pact armed forces, the army was 
by far the largest service. 



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Hungary: A Country Study 

The reorganization of the HP A, still under way in 1989, at- 
tempted to transform its overall structure from one army and one 
corps possessing one tank and five motorized rifle divisions into 
three corps with a combined total of five tank brigades and ten 
motorized rifle brigades. This reorganization set the HP A apart 
from the other armies of the Warsaw Pact, which were still primarily 
divided into divisions and regiments. The leadership of the HP A 
believed the reorganization would make the armed forces more effi- 
cient by reducing the number of commands by about one-third. 

In the late 1980s, the central headquarters of the HP A was 
in Szekesfehervar, with the three corps headquartered in Tata, 
Kaposvar, and Cegled, respectively. Each corps consisted of five 
brigades subdivided into battalions, including an independent 
artillery battalion and an engineering battalion. The largest corps, 
centered in Tata, possessed three tank brigades and two motorized 
rifle brigades. The two other corps each had one tank brigade and 
four motorized rifle brigades. The corps stationed in Cegled was 
a skeleton unit. The three corps together possessed three SA-6 
surface-to-air missile (SAM) regiments. 

In addition to the three corps and fifteen tank and motorized 
rifle brigades, the HPA possessed independent artillery and Scud 
surface-to-surface missile brigades, as well as an airborne battalion 
(the thirty- seventh, stationed in Szolnok). An antitank regiment, 
an antiaircraft artillery regiment, and an SA-4 SAM regiment were 
still likewise army, and not corps, troops. Independent engineer- 
ing battalions were used for rail and roadway repairs, construc- 
tion projects, and maintenance and repair of telephone and power 
lines. 

In 1988 the Danube Flotilla, incorporated into the army in 1968, 
consisted of 700 men and eighty- two vessels, including ten Nestin 
MSI (riverine) boats. During wartime its chief functions would be 
to clear the Danube and Tisza rivers of mines and to assist the army 
and its materiel in river crossings. 

In 1988 the army possessed 1,200 T-54 and T-55 battle tanks. 
The Soviet Union has been producing these tanks since 1945, but 
some have been built as recently as 1979, and many have been 
upgraded with infrared night- vision systems and laser range-finders. 
The HPA also had about 100 T-72s, a model that appeared in 
Soviet units in the early 1970s and began to be seen in Warsaw 
Pact armies about 1980. Hungary also possessed about 100 PT-76 
light tanks. 

The HPA's artillery inventory in 1988 included 225 M-1938 
(122mm) and 50 M-1943 or D-l (152mm) howitzers and 100 D-20 
(152mm) gun howitzers. It also included 90 2S1 (122mm) and 



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20 2S3 (152mm) self-propelled guns and 100 M-43 (120mm) mor- 
tars. The HPA had fifty BM-21 (122mm) multiple-rocket launchers 
and twenty-four Frog-7 and Frog-9 Scud surface-to-surface mis- 
sile launchers. Antitank defense consisted of 100 AT-3 Sagger (in- 
cluding BRDM-2 self-propelled) and 100 AT-4 Spigot antitank 
guided weapons, 125 SPG-9 (73mm) recoilless launchers, and 100 
D-44 (85mm) and 50 D-12 (100mm) antitank guns. Air defense 
weaponry consisted of 80 S-60 (57mm) towed antiaircraft guns, 
50 ZSU-4 SP (23mm) self-propelled antiaircraft guns; and 30 SA-4, 
60 SA-6, 350 SA-7, and 50 SA-9 SAMs. 

Reconnaissance units in the HPA possessed an estimated 300 
BRDM-2 and 400 Hungarian-produced FUG-65 (OT-65) scout 
vehicles. Motorized infantry units were equipped with 350 BMP-1 
infantry combat vehicles and 1,000 Hungarian-produced PSz-H-IV 
(FUG-70) armored personnel carriers. The PSz-H-IV had been 
in service since 1983, but production was discontinued; it was to 
be replaced by Soviet BMP- 1 tracked mechanized infantry com- 
bat vehicles. 

In the late 1980s, the HPA used as its standard infantry weapon 
the Kalashnikov 7.62mm AKM assault rifle and its 7.62mm 
AMD-65 version with a folding stock. The 7.62mm RPK and RPD 
light machine guns were also in service. As of mid- 1988, the armed 
forces planned to convert to the new standard Soviet 5.45mm 
weapons, but the actual conversion had not yet begun. 

The HPA imported most of its ground forces weaponry from 
the Soviet Union. Domestic industry supplied only a small por- 
tion of the army's needs, such as small-caliber weapons (pistols, 
rifles, and machine guns), some types of artillery pieces, and am- 
munition. 

In 1988 the HPA's stock of road transport vehicles consisted 
mostly of Hungarian-produced heavy-duty D-566 trucks, Soviet 
GAZ-69 and UAZ-69 trucks, and East German Robur LO-1800 
trucks. Soviet Ural-355 and ZIL-131 trucks had just been in- 
troduced into service. 

Engineering equipment included PMP heavy pontoon bridges, 
GSP ferries, K-61 and PTS amphibious vehicles, T-54 MTUs, 
MT55s, and TMM truck-mounted bridging units to build shorter 
spans. Hungary built bridging equipment under license from the 
Soviet Union, Czechoslovakia, and East Germany. Signal troops 
used Hungarian-made and Soviet-made equipment. 

The HPA's engineering and construction corps were considered 
top notch among the Warsaw Pact countries for their excellent sup- 
port of amphibious operations. Even Western analysts have called 



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Hungary: A Country Study 

this contribution Hungary's most important one to Warsaw Pact 
defense. 

If engineering was the strongest component of the HPA, logis- 
tics was its weakest. Only the regular army was trained in logistics 
and provided with means of transportation. In a war, the under- 
equipped units would have few logisticians and an insufficient num- 
ber of vehicles. 

In August 1989, the Ministry of Defense disbanded an armored 
brigade of about 2,000 officers and enlisted men stationed in 
Szabadszallas in Bacs-Kiskun County as part of a planned 9 per- 
cent reduction of troops and arms in the army scheduled for 1989 
and 1990. Most of the heavy weaponry at the site was scheduled 
to be melted down. 

Air Force 

In 1989 the Hungarian air force was organized into one air 
division and one air defense division, both headquartered at 
Veszprem. The air division consisted of three fighter or fighter- 
bomber regiments of three squadrons each. The air division also 
possessed one helicopter regiment consisting of three squadrons, 
one transport regiment consisting of two squadrons, and one re- 
connaissance squadron. The air defense division, responsible for 
ground-based air defense, consisted of three SAM regiments. Air 
force personnel in 1988 numbered approximately 22,000, of whom 
8,000 were conscripts. The ratio of career personnel to conscripts 
was slightly less than two to one. 

In 1988 the air force possessed 135 combat aircraft and 40 at- 
tack helicopters. The three fighter-bomber squadrons possessed 
ninety MiG-21F/PF/bis/U and forty-five MiG-23M fighter- ground 
attack aircraft. The reconnaissance squadron flew ten Su-22 air- 
craft. The two transport squadrons possessed fifteen An 24/26s and 
An-2s. The three helicopter squadrons together had forty Mi-24 
attack helicopters, twenty-five Mi-8 medium- transport helicopters, 
twenty-five Ka-26 helicopters for training and civilian duties, and 
five Mi-2 light transport helicopters. Yak-1 Is and Yak- 18s, L-29s, 
and MiG-15UTIs were used for training purposes. The air defense 
system consisted of one division with three SAM regiments pos- 
sessing some twenty sites and 120 SA-2/3 missiles. In June 1989, 
Brigadier General Istvan Schmidt, commander of the Hungarian 
air force, announced that no modernization of the air force would 
take place in the near future, meaning that Hungary would con- 
tinue to rely heavily on the units of the Soviet air force stationed 
in the country. 



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Manpower 

Article 70 of the Constitution states that the "defense of the coun- 
try shall be the duty of every citizen of the Hungarian People's 
Republic. Citizens shall perform military service on the basis of 
the universal system of the draft." Therefore, according to the Na- 
tional Defense Act of 1976, male citizens become eligible for mili- 
tary service after January 1 of the year in which they turn eighteen. 
In 1988 about 75,300 males turned eighteen, of whom 25 percent — 
the highest percentage among the Warsaw Pact armies — could be 
expected to be found unfit for military service because of health 
problems. More than 32 percent of conscripts were twenty-two years 
old, showing that many men were able to defer their military service 
for educational or other reasons. 

Young men were liable for national service conscription until 
age twenty-three and subject to call-up in times of an emergency 
until age fifty-five. Those whose military service had been inter- 
rupted or postponed were liable for conscription until age twenty- 
eight, although draft evaders were liable for conscription until age 
forty. Women from ages eighteen to forty-five in medical profes- 
sions and women professionals within the Ministry of Interior were 
automatically registered for military service but could serve only 
in time of war and then only in noncombatant functions. 

Before 1980 all recruits served for two years except those who 
had a completed their higher education; these recruits served for 
eighteen months. In 1980 the term of conscription was reduced 
to eighteen months but remained at twenty-four months for those 
conscripted into the air force. Recruits having children served even 
less time. In the late 1980s, call-up occurred twice a year, in Febru- 
ary and in August. 

Reserves consisted of physically fit men who were not currently 
serving in the armed forces. Men who had never been drafted could 
be called up for six months of reserve training until age forty. 
Officers who had served could be called up every five years for a 
four-month period of refresher training, while NCOs and privates 
could be so trained for up to three months every five years. All 
physically fit males could be called up at least once a year for maneu- 
vers lasting no more than twenty days, although legally, if neces- 
sary, they could serve for a full year. Conscripts could be kept an 
additional two months after completing national service. 

Conscientious Objection 

According to the National Defense Act, those persons who re- 
fused military service during peacetime could receive up to five 
years' imprisonment. Permission was sometimes given, however, 



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Hungary: A Country Study 

to Jehovah's Witnesses, Seventh-Day Adventists, or Nazarenes to 
serve as noncombatants in military construction units. Government 
opposition to Catholic conscientious objectors increased after 
October 1986, when the country's Catholic bishops declared that 
Catholics could neither refuse nor condemn obligatory military ser- 
vice, although they did urge the state to allow some sort of alter- 
native service. This proclamation was followed by reports of dozens 
of conscientious objectors' being arrested and sentenced to thirty 
to thirty-six months' imprisonment by the Budapest Military 
Tribunal. These so-called "expedited" proceedings were charac- 
terized by trials lasting only ten to fifteen minutes. One man so 
imprisoned, Karoly Kiszely, wrote a letter to the Conference on 
Security and Cooperation in Europe enumerating the ways in which 
conscientious objectors were harassed: they were physically abused, 
and their punishments were imposed without court hearings, 
without regard for judicial processes, and without legal counsel. 
Those convicted were allowed contact with only two family mem- 
bers, and they were permitted to send or receive only one "heav- 
ily censored" letter per month and to receive only one authorized 
visit by a relative each month. Furthermore, they were crowded 
together in prison with common criminals. 

The government showed signs of softening its position in late 
1987, when it reduced the term of military service for future cler- 
ics from eighteen to twelve months. And in early 1989, an amend- 
ment to the National Defense Act permitting conscientious objection 
was introduced into the National Assembly. Conscientious objec- 
tion was to be allowed beginning in the second half of 1989. On 
March 1, 1989, the government announced that seventy conscien- 
tious objectors serving time in prison had been released and that 
their criminal record would be dropped, pending approval of a new 
National Defense Act. Noncombatant service was twenty-four 
months in the army and another twelve months of nonarmed reserve 
service. Civilian service was initially proposed for thirty-six months 
at locations to be determined by the government, with labor paid 
for in wages. In June 1989, the National Assembly voted to lower 
the duration of civilian service to twenty-eight months and resolved 
that the noncombatant service and nonarmed reserve service 
together not exceed twenty-eight months. 

Education and Training 

Much of the military education system developed since 1949 has 
been patterned on Soviet models, with the help of Soviet advisers. 
This pattern was also applied to troop training programs in gar- 
risons and in the field. Yet despite Soviet attempts to make the 



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HPA more concerned with defense of the Warsaw Pact countries 
than with national defense, the army remained highly patriotic and 
nationalistic. Moreover, toward the end of the 1980s attempts were 
made, despite the HSWP's objections, to partially depoliticize the 
military. 

Conscript Programs 

Call-up consisted of three steps: obligatory premilitary training 
from January 1 of the year in which the future draftee turned seven- 
teen; military registration at the District Military Replacement 
Center, where the registree received a medical examination and, 
if disabilities were found, was obliged to correct those disabilities 
capable of correction and continue premilitary training; and recruit- 
ment, at which time questions of medical fitness and service branch 
and unit assignment were resolved. Recruits underwent basic train- 
ing for four weeks, then took the oath of allegiance. This process 
was followed by six months of specialized training for whatever 
task the recruits were to perform. They were then assigned to units. 
During all this time, the recruits also underwent ideological training. 

Through political indoctrination, the military aimed at incul- 
cating soldiers with a Marxist- Leninist worldview that would enable 
them to accept party positions and the way these positions related 
to internal and external events. Soldiers were taught the need for 
discipline, self-sacrifice, and loyalty to party, country, and the so- 
cialist alliance (including the Soviet Union), and were inculcated 
with a consciousness of their own invincibility. In fact, the HPA 
required that only 10 percent of a conscript's training time during 
the first phase of basic training be devoted to strictly political topics, 
while 70 percent was spent on military subjects. These relative 
proportions demonstrated that the HPA leadership viewed politi- 
cal indoctrination as secondary to teaching basic soldiering to 
recruits and persuading the brighter among them to seek a profes- 
sional military career. Those who showed both desire and ability 
were given twenty-eight hours of free time each week to prepare 
to enter university. The HPA also awarded scholarships to some 
recruits to attend university full time during their service time, plus 
another twenty-four days of additional annual leave and consider- 
ably increased pay and benefits. 

The combat training for recruits resembled that of other Warsaw 
Pact countries. Soldiers were taught proficiency with weapons, 
weapon systems, battlefield tactics, endurance, and stress preven- 
tion. Tactical exercises and maneuvers were often undertaken with 
Soviet forces in the country. Battle areas in such exercises could 
be twenty- six to thirty-two kilometers deep, and nuclear strikes were 



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Hungary: A Country Study 



simulated. Soldiers sometimes were electronically monitored for 
stress. 

Housing provided to conscripts was of poor quality. In Decem- 
ber 1988, Minister of Defense Ferenc Karpati admitted that 10 
percent of the barracks were not fit for habitation because they did 
not have regular hot water service. In general, most barracks were 
sixty to eighty years old and badly needed new wiring and 
plumbing. 

Material deprivation aside, most conscripts considered their mili- 
tary training inadequate. As well as spending time in political in- 
doctrination courses, conscripts were obliged to perform a great 
deal of work in the labor-starved economy (see Labor Force, ch. 3). 
For example, in 1987 soldiers worked 32,000 man-days in agricul- 
ture. Many conscripts, even those assigned to border guard duty, 
regarded military service as a waste of time. 

Specialized- Officer Programs 

Despite the benefits, youth in the late 1980s showed little interest 
in professional military careers. According to the Ministry of 
Defense, this lack of interest resulted in a pool of applicants smaller 
than the number needed for a good selection of candidates. 

Candidates for officer training were chosen by the ministries of 
defense, interior, and education, together with the Communist 
Youth League's central committee (see Mass Organizations, ch. 2). 
These candidates had to be of "good character," politically relia- 
ble, physically fit, single, and not over twenty-one years of age, 
and they had to demonstrate military aptitude. They were required 
to take mathematics and physics tests and psychological examina- 
tions. Knowledge of Russian was necessary to become an officer 
in the air force. After such screening, candidates attended a mili- 
tary college for four years as officer cadets. After passing final 
examinations, they became junior officers (in the army, air force, 
or border guard) and were obligated to serve fifteen years. 

Political officers were trained in military colleges but took different 
courses. A background in the Communist Youth League and the 
Hungarian National Defense Association (Magyar honvedelmi 
szovetseg — MHSz) helped in selection for this career. Older can- 
didates were chosen from the party apparatus or from those with 
degrees in the "science of Marxism-Leninism." The Ministry of 
Defense's Main Political Administration oversaw the selection and 
screening of political officers. 

In the late 1980s, the HP A operated schools ranging from secon- 
dary schools through colleges for the academic, technical, and po- 
litical training and advancement of regular personnel. Many senior 



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officers, in addition to successfully completing military schooling 
at all levels, also were sent to the Soviet Union for courses in that 
country's military institutions. Such Soviet schools included the 
Voroshilov General Staff Military Academy in Moscow, the Frunze 
Military Academy and the Malinovskii Military Academy, the 
Zhukov Air Defense Academy, and the Moscow Military Academy 
of the General Staff. Courses of study in the Soviet Union lasted 
from two to eight years. The Soviet Union also sent lecturers and 
textbooks to Hungary. Hungarian officers also were trained in 
Czechoslovakia and Poland. 

The military academies were the highest level of military school- 
ing, the most important of which was the Miklos Zrinyi Military 
Academy in Budapest. Before 1968 its entrance requirements were 
lenient, but after that time entry was obtained only upon the suc- 
cessful completion of a military college or an officers' training school 
of equivalent ranking. The course of study took three years, and 
a variety of subjects were offered. Graduation from the Miklos 
Zrinyi Military Academy was necessary to attain high-level com- 
mand positions. 

The Lajos Kossuth Military Academy in Szentendre in Pest 
County also ranked high in the military education system. It was 
considered to be academically equal to other institutions of higher 
learning. Graduates were commissioned as army officers. The Lajos 
Kossuth Military Academy offered specialized training in mecha- 
nized infantry, armored troops, surface-to-surface artillery, en- 
gineering, military economy and supply, and border guard work. 
The Kossuth Academy required knowledge of two foreign lan- 
guages, one of which had to be Russian. The school also offered 
many courses on various aspects of Marxism-Leninism. 

Other high-level military schools included the Mate Zalka Tech- 
nical Military Academy in Budapest, which specialized in antiair- 
craft, artillery, radar technology, signaling and telecommunications, 
and nuclear, biological, and chemical (NBC) defense and warfare; 
the Gyorgy Kilian Technical Air Force Academy, which trained 
ground and air crews and taught aviation and aircraft maintenance; 
the Honved Military College, which offered a three-year course 
of study for university graduates training to become officers; and 
the Frigyes Karikas Military College. The HPA also operated 
specialized military high schools in Eger, Nyiregyhaza, and Tata. 

Volunteers for military colleges were generally between the ages 
of eighteen and twenty-one and were drawn from all parts of the 
country. As a group, their precollege academic performance was 
not impressive. Nearly three-quarters chose a military career be- 
cause they liked the military life-style and its contribution to society. 



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Hungary: A Country Study 

The remainder had motives that the HPA found less than admira- 
ble, such as the desire for high pay and fringe benefits, and had 
goals that have been described as "incoherent" or "selfish," such 
as a desire for adventure. Some students also came from families 
with a strong military tradition. In the mid-1970s, about 14 per- 
cent of the students at the Gyorgy Kilian Technical Air Force 
Academy and 19 percent of those sent to study at Soviet military 
colleges had at least one parent with a military background. 

Warrant officers were selected from career servicemen and con- 
scripts. They could not be older than twenty-three, and they had 
to have had at least an eight-year general (elementary) school edu- 
cation certificate. Their training took two years, and they could 
be promoted to the rank of sergeant or staff sergeant. They were 
obligated to serve at least twelve years. 

Officers and regimental sergeants major (sergeant, master ser- 
geant, and sergeant major) in the military were compensated rela- 
tively well. Although starting salaries were low, they more than 
doubled after fifteen to twenty years of service. Officers also received 
an additional clothing allowance. They could retire at age fifty- 
five instead of age sixty (the age required for the rest of the popu- 
lation), and their pensions totaled 60 to 90 percent of the average 
of their last five years' salaries. They also received from twenty- 
five to thirty-seven days of vacation a year. 

However, the professional military life also had its disadvantages. 
Officers could not engage in the second, unofficial economy and 
were thus required to live solely off their salaries, a difficult situa- 
tion in Hungary (see Domestic Consumption, ch. 3). The hous- 
ing provided by the military was both cramped and substandard. 
A professional soldier could be assigned to four or five different 
garrisons during his career, requiring moves by the entire family. 
In some locations, wives could not easily find suitable employment, 
essential foods, and social services. Military authorities were very 
concerned about the increasing alienation and materialism and the 
resulting high rates of alcoholism, suicide, and divorce among 
officers of the HPA. 

Premilitary Programs 

Hungarian schools required some military education for all stu- 
dents from the seventh grade through secondary school and higher 
education. The regime saw military education as an integral part 
of general education, a way by which young people could acquire 
the skills they would need when serving in the army and a means 
to increase the defense capability of the country. Such training in- 
cluded weapons maintenance and use, radio communications, 



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electronic and mechanical engineering, aircraft piloting, parachute 
training, and scuba diving. 

Actual premilitary training was optional but was advised before 
age seventeen and obligatory from age seventeen to call-up, up to 
age twenty-three. No more than two years of such training could 
be required. This training could assume different forms, includ- 
ing a camp setting. In 1984 the MHSz and the Pioneer youth or- 
ganization established such a camp for premilitary training on 
Szentendre Island in the Danube, north of Budapest. In 1987 nearly 
150 secondary students attended, half the number that applied. 
The boys were placed in radio communications and shooting 
groups, while both girls and boys participated in sports. Various 
programs included military theory and practice, computer games, 
movies, "patrol competitions," sports, and excursions. Soldiers 
supervised some activities, and the HP A provided the meals. 

Paramilitary Programs 

In the late 1980s, the MHSz gave lessons and courses related 
to defense and civil defense, and it aided in the premilitary train- 
ing of young people and in military training for reservists. The 
MHSz resembled the Soviet Voluntary Society for the Promotion 
of the Army, Air Force, and Navy (Vsesoiuznoe Dobrovol'noe 
Obshchestvo Sodeistviia Armii, Aviatsii, i Flotu — DOSAAF). 

In small villages, men were required to take part in weapons 
training, using air guns, at least once a year. All adults were also 
obliged to participate in civil defense drills, using as masks. 

In the cities, workers in large organizations formed "civil defense 
chains," a system of notifying co-workers to meet at a prearranged 
place during a civil emergency. Every year each workplace held 
at least one civil defense drill. 

Uniforms and Rank Insignia 

In 1989 the army had approximately the same number of ranks 
found in other typical military organizations, but these ranks were 
grouped into six classifications, the names of which did not always 
translate readily to those used by other military organizations. Com- 
missioned officer ranks, however, were standard and ranged from 
second lieutenant to general. They included four general officer 
ranks: brigadier general, lieutenant general, colonel general, and 
army general. Field grades were major, lieutenant colonel, and 
colonel. Junior officer ranks began with sublieutenant and advanced 
through second lieutenant and first lieutenant to captain. 

Enlisted grade nomenclature differed from that used by most 
of the world's armies. The three lowest grades — private first class, 



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Hungary: A Country Study 

corporal, and lance sergeant — were called noncommissioned 
officers. The next four grades — staff sergeant, sergeant first class, 
master sergeant, and command sergeant major — were called 
regimental sergeants major; in the armies of most countries these 
ranks would also be included among the NCO grades. Above the 
regimental sergeants major but below the lowest commissioned 
officer ranks were two grades that were translated as ensigns, which 
were the equivalent of warrant officers in other armies. 

Rank insignia consisted of shoulder boards for officers, ensigns, 
and higher-grade enlisted men (see fig. 11). Lower grades wore 
patches on shirt or blouse collars. Rank was indicated by the amount 
of ornamentation and the number of stars on the shoulder board. 
Officers had gold piping around the edges of the boards; ensigns 
and enlisted men had silver. Generals' stars were placed upon a 
solid gold braid background. Junior officers' boards did not have 
braiding; officers of field grades had boards that were partly braided. 
Except for the outer braiding, boards of the higher-grade enlisted 
men resembled those of junior officers. Background colors and 
bronze devices identified service branches. Uniforms were 
brownish-olive drab. Enlisted men wore heavy wool in winter and 
a lighter colored cotton in the warmer seasons. Officers wore the 
same colors, but the materials were worsted wool for winter and 
either cotton or tropical-weight worsted wool for summer. The most 
frequentiy seen uniforms were the service, dress, and field uniforms. 
The service uniform was worn for most light-duty work, recrea- 
tion, and informal social occasions. It consisted of a comfortably 
fitting "blouse," long trousers, and low shoes. In summer a lighter- 
weight, light-colored shirt was worn instead of the blouse. The dress 
uniform consisted of the same blouse and trousers but had extra 
ornamentation, and the trousers were tucked into high boots. 
Officers wore a Sam Browne belt (a belt with a strap over the right 
shoulder) and, for the most formal occasions, a sword. Field uni- 
forms included high boots into which the trousers were tucked. In 
summer the officers' field uniforms included a short jacket, Sam 
Browne belt, and sidearm; enlisted men's uniforms had a cotton 
shirt, which could be worn with the sleeves rolled up. A heavy over- 
coat was added in the winter. 

Twelve decorations were still being awarded in the late 1980s 
for extraordinary achievement, special merit, or outstanding per- 
formance. Another twenty-four were authorized to be worn but 
were no longer awarded. A few of those had been discontinued, 
but most of them were applicable to earlier service, such as during 
World War II or the communist takeover after the war. 



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The highest-ranking decoration was the Hero of Socialist Labor. 
It was followed in order by the Medal of the Hungarian People's 
Republic, the Red Banner Order of Merit, and the Red Star Order 
of Merit. Some of these decorations were awarded in two or more 
degrees, in which the first degree was the highest class. The Order 
of Merit for Outstanding Service was frequently awarded to higher- 
ranking military personnel. Although it ranked twenty-fourth in 
the list of thirty-six decorations, it was one of the few that was 
accompanied by a monetary award. A substantial pension supple- 
ment accompanied three or four of the more important decorations. 

Internal Security and Public Order 

In 1989 the Ministry of Interior was responsible for public order, 
public safety, internal security, and, since the beginning of 1988, 
public administration. The ministry controlled the armed security 
organizations in the country — the National Police, the Security 
Police, and the Border Guard — but not the Workers' Guard, which 
was subject directly to the HSWP. The ministry was also respon- 
sible for such diverse tasks as fire prevention and passport control. 

In the late 1980s, the government attempted to limit the minis- 
try's arbitrary use of power or at least tried to clean up its public 
image. In an interview in June 1989, Minister of Interior Istvan 
Horvath suggested that the ministry ought to transfer its control 
of the Security Police to the local governments. 

National Police 

The public police forces performed routine police duties through- 
out the country. Although they operated within local jurisdictions, 
they were centrally organized and controlled by the Ministry of 
Interior. 

To become a public police officer, a candidate had to have 
finished general elementary school and, in theory, to have com- 
pleted two ten-month training periods. However, most officers 
serving in 1989, according to the Ministry of Interior, did not have 
this kind of education. In the late 1980s, morale problems affected 
the police. Inflation had eaten away their salaries, and the crime 
increases had overburdened their work loads (see Incidence of 
Crime, this ch.). In addition, policemen could not travel to the 
West. On July 5, 1989, policemen founded the Independent Police- 
men's Trade Union to protect their interests. 

As Hungary inched toward democracy during the late 1980s the 
populace felt freer to criticize the police. The Ministry of Interior, 
in turn, felt obliged to publicize reforms. For example, in April 
1989, the Federation of Young Democrats staged a sit-in in front 



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Hungary: A Country Study 




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National Security 



of the headquarters of the Ministry of Interior. This organization 
was protesting the lenient sentences given by military courts to 
policemen who committed brutality. Federation members de- 
manded that the minister of interior resign and that the ministry 
be removed from party control. 

More surprising was the ministry's reaction to this criticism. In 
a press conference, a ministry spokesperson claimed that the "direct 
supervision" of the ministry had indeed been transferred to the 
government. During the same month, a ministry spokesperson con- 
demned the acts of some police officers who had abused their 
authority and engaged in "impermissible activities." In the late 
1980s, the ministry appeared to be concerned with its public image 
and claimed to be investigating "all allegations" of unlawful or 
improper activities by its agents. In a rather euphemistic but tell- 
ing statement, Minister of Interior Horvath proclaimed in August 
1989 that "protection of the public order [must] be provided 
according to European standards in the late 20th century." 

Security Police 

In the late 1980s, Hungary's 15,000 member Security Police was 
controlled by the Ministry of Interior. However, unique among 
Warsaw Pact countries, Hungary lacked a uniformed security police 
force. Such a force — the AVO — had existed but was disbanded in 
October 1956 (see Background and Traditions, this ch.). Given 
the vehemence with which the public hated the AVO and associated 
it with the Stalinist terror, the Kadar regime saw fit not to revive 
it, even under a different name. Nevertheless, until the late 1980s 
the Security Police continued to harass and arrest those persons 
deemed to be political enemies. 

The reform of the political system during the second half of the 
1980s appeared to have also affected the Security Police. In an in- 
terview on Hungarian television in July 1989, Minister of Interior 
Horvath claimed that the Security Police no longer viewed the 
domestic opposition as political enemies, an image that had be- 
come "obsolete" in a multiparty system. He condemned previ- 
ous Security Police actions, such as harassing and detaining known 
dissidents before national holidays as "a bad reflex action of a differ- 
ent type of power structure." Horvath stressed that the Security 
Police did have a legitimate intelligence and counterintelligence 
function but was not an organization "placed above the citizens." 

Border Guard 

In 1989 Hungary's Border Guard numbered 16,000, operating 
in eleven districts. Conscripts totaled 1 1 ,000, or nearly 70 percent 



255 



Hungary: A Country Study 

of the total. Although nominally controlled by the HPA, the Border 
Guard Headquarters of the Ministry of Interior took orders from 
both the party Basic Organization in the ministry and the Govern- 
ment Administration and Administrative Department of the 
HSWP's Secretariat (see Party Structure, ch. 4). The Border Guard 
Command was established in 1946 and reorganized in 1950. Its 
tasks were governed by Decree Number 40/1974, which brought 
border regulations into conformity with those of other Warsaw Pact 
countries. The exact level of party and Communist Young League 
membership among the Border Guard was unknown, but it was 
certainly higher than that of the army. For this reason, Volgyes 
argued that the regime may have considered this organization to 
be more reliable than the army as a whole, although the high per- 
centage of conscripts left this contention open to question. 

Border Guard work in Hungary required a high level of educa- 
tion, political training, good health, "good appearance," and even 
a knowledge of the foreign languages necessary for work at border 
crossing stations. Statistics from 1987 showed that 40 percent of 
guards at border crossing points had finished secondary school or 
university. In 1986 border guards checked the documents of 50 
million people visiting or transiting Hungary through sixty-six high- 
way, rail, river, and air border crossing points. 

In the late 1980s, a permit was nominally required to enter a 
narrow zone along the western and southern borders, but accord- 
ing to Major General Janos Szekely, chief of the Border Guard 
Headquarters, "anyone who applies to the proper agency for a per- 
mit usually gets it." An estimated 900 voluntary Border Guard 
auxiliary groups aided in the arrest of about 20 percent of border 
violators. 

During the late 1980s, Hungary's borders with two countries 
received international attention. On May 3, 1989, Hungarian sol- 
diers began removing the barbed wire fence on the border with 
Austria. Calling the fence "outdated" and superfluous, given the 
existence of Hungary's new (1988) liberal passport law, the Hun- 
garian government publicly stated that all sections of the fence would 
be removed by the end of 1990. Although the Austrian govern- 
ment publicly welcomed this development, it privately feared that 
other East Europeans, especially Romanians, would travel to Hun- 
gary in order to escape into Austria. 

It was not Romanians but East Germans touring Hungary in 
the summer of 1989 who took advantage of the newly opened border 
to flee to Austria. The Hungarian Border Guard interfered only 
sporadically with this flight, and eventually the Hungarian govern- 
ment allowed the East Germans to leave through Hungarian border 



256 



National Security 



checkpoints. In September 1989, the government announced that 
it would allow all the East Germans in the country wishing to emi- 
grate to the West to leave Hungary. By the beginning of October, 
more than 35,000 had left the country to go to West Germany. 
The East German government protested that Hungary had reneged 
on its border agreements with the other members of the Warsaw 
Pact, but the Hungarian government claimed that it was merely 
following the spirit of the Helsinki Accords that were signed as part 
of the Conference on Security and Cooperation in Europe in 1975 
and the border remained open. 

Workers' Guard 

The Workers' Guard, a paramilitary organization directly con- 
trolled by the HSWP, claimed to have 60,000 members in 1988. 
Possessing only small arms, its mission was officially limited to pro- 
tecting the population and state property in times of war or un- 
rest. In fact, the Workers' Guard assisted the National Police and 
army during events that required crowd control. The guard wore 
its own distinctive gray uniform. 

Directly controlled by a permanent department of the HSWP's 
Central Committee, the Workers' Guard was, in effect, the party's 
private army, and the overwhelming majority of the guard were 
party members. Founded in 1957 shortly after the revolution, this 
organization became the chief protector of the newly formed Kadar 
regime. 

In June 1989, the government announced that in the future it, 
not the party, would have control over the Workers' Guard and 
that many of the functions of this paramilitary organization would 
be eliminated. An interministerial committee of the government 
was formed to examine the mission and activities of the guard and 
perhaps even to rename it. 

Criminal Justice System 

Like other criminal justice systems in Marxist-Leninist coun- 
tries, Hungary's criminal justice system was, until the late 1980s, 
heavily politicized. The system, like other aspects of the political 
system, was subject not to the rule of law but rather to the whims 
of the party. As part of its efforts at democratization in the late 
1980s, the government began an effort to create an independent 
judicial system. 

Incidence of Crime 

Crimes against both people and property soared during the 1980s. 
Violent crime, which also increased dramatically, was dispro- 
portionately committed by Gypsies (see Minority Groups, ch. 2). 



257 



Hungary: A Country Study 

Gypsies made up about 4.7 percent of the population, but they 
numbered 54 percent of those persons convicted of murder and 
rape and 49 percent of those convicted of robbery. 

Criminal offenses against the state and private individuals cost 
the economy nearly US$50 million in 1988, or 0.5 percent of the 
country's annual budget. Losses from criminal offenses against pri- 
vate property doubled from 1987 to 1988. White-collar crime, es- 
pecially bribery of office executives, also rose, and the country's 
efforts to increase the role of private enterprise led to a new type 
of criminal activity — money laundering. 

By contrast, certain other types of activities formerly considered 
illegal by the state had become legal under new, more tolerant laws. 
Thus, in the late 1980s liberalized passport and customs regula- 
tions reduced currency crimes by 25 percent and smuggling cases 
by 20 percent. 

In the 1980s, the level of alcoholism in Hungary grew at the 
fastest rate in the world. In the 1950s, the communist regime con- 
sidered alcoholism to be a "remnant of the past," but the increase 
in alcoholism over the years had forced the government to pay at- 
tention to this problem. The rapidly rising rate of alcohol consump- 
tion was fueled by an increasing number of women and youth with 
drinking problems. About 120,000 children lived in families in 
which one or both parents were heavy drinkers, and reports sur- 
faced of youth gangs drinking in Budapest subway stations. 

However, the government's data showed that at least in the work- 
place the problem of alcoholism was diminishing, rather than in- 
creasing. Surveys taken between 1985 and 1987 showed that 
drunkenness in the workplace dropped each year: from 9.1 per- 
cent in 1985, to 3.7 percent in 1986, and to 2.2 percent in 1987. 
Nevertheless, alcohol, rather than controlled substances, was related 
to virtually all of the crimes committed under the influence of any 
type of drug. In the first eight months of 1988, more than 18,500 
crimes were committed under the influence of alcohol, while 37 
crimes were committed under the influence of hard drugs (heroin 
and cocaine) and 84 under the influence of drug substitutes. 

According to the Ministry of Interior, although hard drugs were 
shipped through Hungary, they did not appear to be a serious 
problem for Hungarian society. In the late 1980s, Ministry of In- 
terior statistics cited only forty-five to fifty prosecutions per year 
for narcotics violations. Nevertheless, the use of hard drugs did 
appear to be rising. 

The use of drug substitutes or the abuse of prescription drugs, 
however, caused the government serious concern. Abusers obtained 
opium-based and other drugs from hospitals, pharmacies, and drug 



258 



National Security 



factories by stealing, by forging prescriptions, or by buying drugs 
from staff looking for extra money. Glue sniffing was also a problem, 
especially for children aged seven to fifteen. In the late 1980s, the 
press admitted that the country possibly had 50,000 drug addicts 
but did not mention the drugs responsible for addiction. 

Before 1984 the government had denied the existence of a drug 
problem, but since then the subject has received wide public dis- 
cussion. In the late 1980s, laws against the use of controlled sub- 
stances were flexible and gave judges the ability to adjust sentences 
according to the quantity of the drug involved and the age of the 
seller. Those persons in possession of "excessive amounts" could 
receive up to an eight-year prison term. 

Penal Code and Criminal Procedure 

Hungary's legal system has been influenced by Roman law. The 
country's first written law code, compiled by Stephen Werboczy 
in 1514, codified the unwritten laws and customs that had existed 
up to that time. The Tripartitum, as this codification was called, 
was modified over the following centuries, but a written, formal 
law code was not officially published until 1878. This publication 
formed the basis of the Penal Code appearing in the early 1950s, 
but many articles remained unchanged until the entire code was 
republished in 1961. 

The Penal Code and a decree on criminal procedures that ap- 
peared in 1972 incorporated constitutional revisions made at that 
time (see Amendments of 1972, ch. 4). Both the code and the decree 
reflected the subordination of the legal system to the state, and 
harsher penalties were meted out for crimes against the state and 
state property than for crimes against the person and private 
property. The Penal Code was revised in late 1978 and again in 
September 1989. The latest revision, which still required the ap- 
proval of the National Assembly as of September 1989, abolished 
the use of the death penalty for crimes against the state. 

Hungary's system of justice did not subscribe to the adversary 
system; neither did it recognize common law or precedent (see 
Judicial Organs, ch. 4). The prosecutor in a Hungarian court was 
responsible for presenting all the evidence, both for and against 
the defendant. Defendants had the right to legal counsel, who at- 
tempted to ensure that the prosecutor's presentation of the case 
was unbiased. Judges were bound by the law as written, not by 
the decisions of other judges. The judge's interpretation applied 
only to the specific case; it set no precedent for other cases. 

Military Justice 

Military tribunals were part of Hungary's judicial system and 



259 



Hungary: A Country Study 



were responsible to the minister of justice and to the minister of 
defense. A military council of the Supreme Court reviewed cases 
from lower military tribunals or tried the most serious cases. 

Military court jurisdiction was usually limited to cases involv- 
ing military personnel, cases involving civilians on military instal- 
lations, or cases involving an aspect of the country's defense. 
Military courts had a judge and two lay assessors (non-professional 
judges), whose functions were similar to their equivalents in civilian 
courts. Military judges were commissioned professional officers with 
law degrees. Lay assessors were chosen from all ranks, at respec- 
tive meetings of officers, regimental sergeants major, and enlisted 
personnel. Members of the court had to have a rank at least equal 
to that of the accused. 

Penal System 

From 1949 to 1961 , the penal system consisted of labor or intern- 
ment camps and prisons with three types of disciplinary regimes. 
By 1961 the regime claimed it had abolished the labor camps. A 
law eliminated these different regimes, but a new system contain- 
ing four regimes has been instituted since. Confinement to peniten- 
tiaries was the most severe regime under the new system, while 
local jails provided the lightest. Prisoners sentenced to the two in- 
termediate regimes were assigned to one of two different types of 
prisons. In 1975 the government introduced an additional regime 
for convicts who committed for the fourth time a violent crime carry- 
ing a sentence of more than one year. 

In July 1989, a prisoner in the Vac Prison north of Budapest 
committed self-immolation, and several hundred of his fellow 
prisoners went on a hunger strike to protest the harshest possible 
regime. The government immediately promised to abolish this re- 
gime, thus affecting 282 male and 14 female prisoners. 

In the late 1980s, the HPA possessed just one penal battalion, 
located in Nagyatad in Somogy County. Soldiers who had received 
seven-month to two-year sentences were sent there to perform 
manual labor, primarily for the HPA but often for the national 
economy. Alcohol played a part in two-thirds of crimes commit- 
ted by soldiers. At least one-third of these crimes involved violence 
against superiors, insubordination, or draft dodging. 

Reaction to Political Dissent 

As with the constitutions of the other Warsaw Pact countries, 
Hungary's Constitution grants rights to citizens but qualifies these 
rights so that they are meaningless (see Constitutional Devel- 
opment, ch. 4). For example, Chapter VII, Article 64 of the 



260 



National Security 



Constitution gives citizens freedom of speech, press, and assem- 
bly, yet Section 54 states that citizens' rights "shall be exercised 
in accordance with the interests of socialism and the people" and 
that these rights "shall be inseparable from the fulfillment of the 
duties of citizens." 

Nevertheless, from the 1970s well into the 1980s Hungarians had 
a wider latitude to criticize their government than did other East 
Europeans. But most Hungarians developed a "self-censorship" 
in which they avoided publicly discussing such sensitive topics 
as one-party rule and Hungary's relations with the Soviet Union 
and the other Warsaw Pact countries. Hungarians thus generally 
avoided problems with the state, while the state gave the appear- 
ance of tolerating dissent. 

The development of samizdat in the early 1980s provoked a severe 
government reaction. In June 1982, several samizdat editors were 
subjected to police surveillance, and later in the year one was fined 
4,000 forints (for value of the forint — see Glossary), about the aver- 
age wage for one month at that time, for publishing without offi- 
cial permission. In the following months, the police began to subject 
others associated with samizdat to both "light" measures (denial 
of permission to travel abroad, periodic house searches, detention, 
fines, or employment difficulties) to those of outright oppression 
(beatings or imprisonment). The regime even used psychiatric 
methods such as closed wards and electric shock therapy against 
dissidents. In 1987 dissidents were still subject to house searches, 
and in 1988 they were still denied passports. 

To stop the tide of unofficial publishing, the government passed 
Decree 49/1984 (XI. 21), which required that all duplicating 
machines and photocopiers be registered with the state, and Decree 
4/1985 (VII20), which allowed police surveillance and even expul- 
sion from the country for those persons whose political beliefs the 
government considered a danger to the Hungarian People's Repub- 
lic, its social order, or public security. The authorities also punished 
official publishers when magazines touched upon taboo subjects. 
For example, in 1983 the editor of Mozgo Vildg (World in Motion) 
lost his job for defying party directives. In 1986 the editors of Tiszatdj 
(Tisza Country) were ordered to resign because of articles in their 
journal describing the horrible situation of Hungarians living in 
Romania (see Mass Media, ch. 4). 

Rock musicians also felt the state's wrath when their music did 
not meet official approval. During the mid-1980s, the Committee 
of Hungarian Radio censored records and songs because they were 
not "optimistic enough" or because they referred to drugs or to 



261 



Hungary: A Country Study 

"red, white, and green" (the colors of the precommunist Hungarian 
flag). 

Unauthorized street demonstrations were also harshly punished 
in the mid-1980s. In 1986 the police brutally broke up a demon- 
stration held on March 15 to commemorate Hungary's declara- 
tion of independence from the Habsburg Empire in 1848. Unofficial 
peace and environmental groups were also harassed when attempt- 
ing to meet publicly. 

However, political reforms of the late 1980s softened the govern- 
ment's view of dissent, although its behavior remained ambigu- 
ous. In October 1988, street demonstrations commemorating the 
revolution were tolerated, and a relatively free press arose. The 
government spoke openly about liberalizing its passport law. Yet 
a Miskolc court in 1988 handed an elderly, disabled pensioner a 
one-and-a-half-year suspended sentence for writing an open letter 
to the HSWP in which he criticized " domestic conditions and cer- 
tain leaders." Legal sanctions resulting from involvement in the 
Revolution of 1956 were lifted for twelve people but remained for 
another fifty-four. 

Hence, as of 1989 the government's record on dissent, as with 
other aspects of the reform of the national security system, was 
mixed. To be sure, regime leaders repeatedly announced their in- 
tent to reform, and, indeed, many important steps were taken in 
that direction. But as Hungarian dissident Miklos Haraszti re- 
minded his audience in 1989, Hungary was still "a country with 
powerful bureaucrats, with the same armed forces, and with a po- 
litical police." 

* * * 

Unfortunately, few English-language sources deal with the past 
and present Hungarian military. English-language sources for Hun- 
garian military history are almost nonexistent outside of the few 
standard surveys of Hungarian history, such as Denis Sinor's History 
of Hungary. A notable exception is Bela K. Kiraly's Hungary in the 
Late Eighteenth Century, which sets forth detailed information about 
the Hungarian-Habsburg military structure of that time. Peter 
Weiss's "The Hungarian Armed Forces Today" provided the most 
current information at the time of this writing. An excellent over- 
view of the HPA since World War II is given by Ivan Volgyes in 
his article "Hungary." F. Rubin's "The Hungarian People's 
Army" is also useful but dated. For information about the HPA's 
force strengths and weaponry, no source is better than the Inter- 
national Institute for Strategic Studies' annual The Military Balance. 



262 



National Security 



Radio Free Europe occasionally produces articles that treat Hun- 
garian military matters. Some translations produced by the Joint 
Publications Research Service and the Foreign Broadcast Infor- 
mation Service concern questions of Hungary's national security. 
(For further information and complete citations, see Bibliography.) 



263 



Appendix 



Table 

1 Metric Conversion Coefficients and Factors 

2 Population, Selected Years, 1920-87 

3 Marriages and Divorces, Selected Years, 1921-86 

4 Infant Mortality, Selected Years, 1921-86 

5 Active Earners by Sector, Selected Years, 1949-87 

6 Gross Output and Net National Product by Sector, 1970, 1980, 

and 1986 

7 Average Investment by Sector, 1961-70, 1971-80, and 1981- 

86 

8 Share of Social Sectors in Employment and National Income, 

1970, 1980, and 1986 

9 Output of Selected Agricultural Products, 1976-87 

10 Contribution to Agricultural Gross Output by Type of Farm, 

Selected Years, 1966-86 

11 Structure of Imports and Exports, 1986 

12 Agricultural Imports and Exports, 1976-86 

1 3 Rank Order of Hungary ' s Principal Trading Partners , 1984, 

1985, and 1986 

14 National Economic Indicators, Selected Years, 1950-86 

15 Foreign Trade and Current Account Balance, 1981-87 



265 



Appendix 



Table 1. 


Metric Conversion Coefficients and Factors 


When you know 


Multiply by 


To find 




04 


inches 




0.39 


inches 


Meters 


3.3 


feet 




62 


miles 


Hectares (10,000 m 2 ) 


2 47 




Square kilometers 


0.39 


square miles 




35 3 


cubic feet 




26 


gallons 


Kilograms 


2.2 


pounds 




0.98 


long tons 




1.1 


short tons 




2,204 


pounds 


Degrees Celsius .... 


9 


degrees Fahrenheit 


(Centigrade) 


divide by 5 






and add 32 





Table 2. Population, Selected Years, 1920-87 
(in thousands) 



Year Females Males Total 



1920 4,112.8 3,874.1 7,986.9 

1930 4,436.7 4,248.4 8,685.1 

1941 4,755.2 4,560.9 9,316.1 

1949 4,781.4 4,423.4 9,204.8 

1960 5,157.0 4,804.0 9,961.0 

1970 5,318.4 5,003.7 10,322.1 

1980 5,520.8 5,188.7 10,709.5 

1985 5,508.1 5,149.3 10,657.4 

1986 5,501.9 5,138.1 10,640.0 

1987 5,494.5 5,126.6 10,621.1 



Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 39. 



267 



Hungary: A Country Study 



Table 3. Marriages and Divorces, Selected Years, 1921-86 
(per thousand population) 



Year 



Marriages 



Divorces 



1921 11.6 0.8 

1930 9.0 0.6 

1938 8.1 0.6 

1948 10.7 1.2 

1960 8.9 1.7 

1970 9.3 2.2 

1975 9.9 2.5 

1980 7.5 2.6 

1985 6.9 2.8 

1986 6.8 2.8 

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 48. 



Table 4. Infant Mortality, Selected Years, 1921-86 
(per thousand live births) 



Year 



Total 



Year 



Total 



1921 
1930 
1938 
1948 
1960 
1970 
1975 



192.7 
152.5 
131.4 
94.1 
47.6 
35.9 
32.8 



1980 
1981 
1982 
1983 
1984 
1985 
1986 



23.2 
20.8 
20.0 
19.0 
20.4 
20.4 
19.0 



Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 61. 



Table 5. Active Earners by Sector, Selected Years, 1949-87 
(in percentages) 



Sector 



1949 



1960 



1970 



1980 



1987 



Industry 19.4 27.9 36.3 33.9 31.2 

Construction 2.2 6.1 7.4 8.2 7.0 

Agriculture and forestry 53.8 38.5 24.4 19.0 19.3 

Waterworks and supply 0.1 0.2 1.2 1.5 1.6 

Transportation and telecommunications .. 4.4 6.5 7.3 8.1 8.3 

Trade 5.3 6.3 7.9 9.8 10.5 

Other material activity n.a. n.a. n.a. 0.9 1.0 

Personal and economic services 3.5 2.5 2.8 3.1 3.7 

Sanitary, social, and cultural services .... 3.8 5.6 7.7 10.4 12.5 

Public administration and other services . 7.5 6.4 5.0 5.1 4.9 

TOTAL 100.0 100.0 100.0 100.0 100.0 

Percentage of women 29.2 35.5 41.2 43.4 46.0 

n.a. — not available. 

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 27, 28, 39. 



268 



Appendix 



Table 6. Gross Output and Net National Product by 
Sector, 1970, 1980, and 1986 
(in percentages, at constant prices) 



Gross Output Net National Product 



Sector 


1970 


1980 


1986 


1970 


1980 


1986 




50.2 


51.8 


50.7 


36.2 


36.9 


36.0 




8.2 


7.5 


6.3 


9.1 


8.8 


7.4 


Agriculture and forestry 


17.8 


17.4 


18.2 


22.3 


19.6 


21.5 


Transportation, post, and 
















5.6 


5.4 


5.6 


7.7 


7.9 


7.8 




7.2 


5.9 


6.1 


11.8 


11.0 


10.6 




1.0 


1.0 


1.1 


0.9 


1.2 


0.9 


Other material activities 


n.a. 


0.5 


0.7 


n.a. 


0.7 


1.2 


Nonmaterial branches and price 














differences 


10.0 


10.5 


11.3 


12.0 


13.9 


14.6 


TOTAL 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 



n.a. — not available. 

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 30. 



Table 7. Average Investment by Sector, 1961-70, 1971-80, and 1981-86 
(in percentages, a+ current prices) 



Sector 


1961-70 


1971-80 


1981-86 




38.2 


34.6 


31.4 




2.5 


2.6 


1.4 




16.6 


13.8 


12.8 


Transportation and communications 


12.9 


12.0 


11.3 




3.1 


4.2 


4.3 




2.9 


5.1 


6.1 






n.a. 


0.5 




23.8 


27.7 


32.2 


TOTAL 


100.0 


100.0 


100.0 



n.a. — not available. 



Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 30. 



269 



Hungary: A Country Study 



Table 8. Share of Social Sectors in Employment 
and National Income, 1970, 1980, and 1986 
(in percentages) 





Distribution of 




Contribution to 






Active Earners 




National Income 


Sector 


1970 


1980 


1986 


1970 


1980 


1986 




. 67.7 


71.1 


70.5 


70.7 


69.8 


63.4 


Cooperative sector 


. 28.1 


25.5 


24.4 


23.6 


23.0 


23.0 


Auxiliary farms of persons 














employed outside agriculture 


n.a. 


n.a. 


n.a. 


3.1 


3.7 


6.6 




. 4.2 


3.4 


5.1 


2.6 


3.5 


7.0 


TOTAL 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 



n.a. — not available. 

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 30; and Janos Kornai, "The Hungarian Reform Process: 
Visions, Hopes, and Reality ," Journal of Economic Literature, 24, December 1986, 
1692. 



Table 9. Output of Selected Agricultural Products, 1976-87 



Product 


1976-80 1 


1981-85 1 


1986 


1987 


Wheat 2 


5,186 


6,066 


5,740 


5,674 


Corn 2 


6,374 


6,977 


7,029 


6,987 


Potatoes 2 


1,567 


1,446 


1,264 


1,270 




3,979 


4,461 


3,760 


4,224 




300 


615 


857 


787 


Catde 3 


1,926 


1,919 


1,766 


1,725 


Hogs 3 


7,805 


8,953 


8,280 


8,687 


Poultry 3 


63,002 


65,082 


61,570 


67,010 


Sheep 3 


2,560 


3,044 


2,465 


2,337 


Beef and Veal 3 


203 


204 


196 


200 


Pork 3 


922 


1,097 


1,048 


1,038 


Poultry Meat 3 


328 


320 


440 


470 


Milk 3 


2,283 


2,752 


2,778 


2,786 


Eggs 4 


4,475 


4,351 


4,290 


4,120 



1 Average. 

2 By 1,000 tons. 

3 By 1,000 head. 

4 By million pieces. 



Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 181, 187, 188; and Nancy J. Cochrane and Miles J. Lampert, 
Agricultural Performance in Eastern Europe, 1987, Washington, 1988, 19-20. 



270 



Appendix 



Table 10. Contribution to Agricultural Gross Output 
by Type of Farm, Selected Years, 1966-86 
(in percentages) 



Type of Farm 1966 1975 1980 1986 



State farms 16.4 18.0 16.8 17.6 

Cooperative farms 48.4 50.5 50.4 51.0 

Household plots 23.7 19.0 18.5 16.4 

Auxiliary and private farms 11.5 12.5 14.3 14.9 



TOTAL 100.0 100.0 100.0 99.9 * 



* Figures do not add up to 100 percent because of rounding. 

Source: Based on information from Janos Kornai, "The Hungarian Reform Process: 
Visions, Hopes, and Reality ," Journal of Economic Literature, 24, 1986, 1701; and 
Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 1988, 174. 

Table 11. Structure of Imports and Exports, 1986 
(in percentages) 



Commodity Group Imports Exports 



Fuel and electricity 19.4 3.5 

Raw materials, semifinished goods, and spare parts 44.8 30.2 

Machinery and capital goods 16.7 30.0 

Industrial consumer goods 11.7 16.2 

Agricultural goods 7.4 20.1 



TOTAL 100.0 100.0 



Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, Budapest, 1988, 272. 

Table 12. Agricultural Imports and Exports, 1976-86 
(in thousands of tons) * 



Average 1976-80 Average 1981-85 1986 



Product Imports Exports Imports Exports Imports Exports 



Grain 

Wheat 8 682 26 1,363 n.a. 1,669 

Corn 116 330 23 250 23 478 

Other _167 _J23 _49 32 _118 27 

Total grain 291 1,035 98 1,645 141 2,174 

Oilseed Meal 614 5 679 32 566 31 

Meat Products 13 285 14 423 19 421 

Sugar 84 31 28 43 n.a. 5 



n.a. — not available. 

* No information reported on amounts less than 1,000 tons. 

Source: Based on information from Nancy J. Cochrane and Miles J. Lampert, Agricultural 
Performance in Eastern Europe, 1987, Washington, 1988, 13-14, 17-18. 



271 



Hungary: A Country Study 



Table 13. Rank Order of Hungary's Principal Trading 
Partners, 1984, 1985, and 1986 * 
(in percentages) 



1984 1985 1986 



Country 


Imports 


Exports 


Imports 


Exports 


Imports 


Exports 




.... 29.1 


30.1 


30.0 


33.6 


30.9 


33.9 


West Germany 


10.7 


7.4 


11.4 


7.8 


12.4 


8.4 


East Germany 


6.4 


5.9 


6.5 


6.1 


6.7 


6.4 




5.1 


5.3 


6.4 


5.3 


6.2 


5.3 


Czechoslovakia . . . . 


5.0 


5.2 


5.0 


5.7 


5.2 


5.9 


Poland 


4.4 


4.2 


4.7 


3.8 


4.7 


4.2 


Italy 


2.4 


3.3 


2.8 


2.9 


2.7 


3.2 


Yugoslavia 


3.9 


3.4 


3.5 


3.6 


2.7 


3.1 




2.5 


2.7 


3.0 


2.3 


2.0 


2.3 




2.0 


2.2 


2.0 


2.0 


2.1 


1.9 






1.5 


1.8 


1.7 


1 .9 


2.0 




0.6 


0.8 


0.9 


1.3 


1.8 


1.9 


France 


1.7 


1.7 


1.8 


1.4 


1.9 


1.5 




1.8 


1.5 


1.9 


1.5 


1.8 


1.3 




1.4 


1.5 


1.5 


1.4 


1.4 


1.6 


Netherlands 


1.3 


1.1 


1.3 


0.9 


1.4 


1.1 


Japan 


1,1 


0.4 


1.7 


3.4 


1.5 


0.5 




1.0 


0.5 


1.1 


3.8 


1.3 


0.7 


Sweden 


1.0 


0.7 


1.1 


0.7 


1.1 


0.8 


Brazil 


3.1 


n.a. 


1.7 


0.3 


1.2 


0.5 


Others 


13.7 


20.6 


9.9 


10.5 


9.1 


13.5 


TOTAL 


100.0 


100.0 


100.0 


100.0 


100.0 


100.0 



n.a. — not available. 

* Percentages of imports and exports for each year, ranked according to the total for 1986. 

Source: Based on information from "Hungary," The Europa Yearbook 1988, London, 1988, 
1309; and Hungary, Central Statistical Office, Statistical Yearbook, 1986, Budapest, 
1988, 276-77. 



272 



Appendix 



Table 14. National Economic Indicators, Selected Years, 1950-86 

(1950= 100) 



Indicator 


1950 


1960 


1970 


1980 


1986 




100 


177 


300 


467 


501 


National income in industry 














27 


37 


46 


48 


46 


National income in agriculture 














48 


31 


22 


16 


19 




100 


228 


456 


804 


919 




100 


106 


103 


115 


124 




100 


197 


448 


708 


618 


Investment in industry 














n.a. 


41 


34 


31 


29 


Production per person in state industry . 


100 


148 


226 


381 


462 


Agricultural hauling power 














302 


1,325 


3,824 


7,461 


8,509 


Fertilizer per hectare 














5 


23 


122 


211 


212 



* n.a. — not available. 

Source: Based on information from Hungary, Central Statistical Office, Statistical Yearbook, 
1986, 1988, 7-9, 15, 79; and Diane Flaherty, "Regional Policy and the Reform 
of Central Planning: An Assessment of the GDR, Hungarian, and Yugoslav 
Approaches," Contributions to Political Economy, 3, March 1984, 42. 



Table 15. Foreign Trade and Current Account Balance, 1981-87 





1981 


1982 


1983 


1984 


1985 


1986 


1987 


Current account balance 1 . . 


. -730 


-64 


298 


338 


-459 


-1440 


-945 


Trade account balance 1 .... 


-83 


459 


533 


608 


112 


-440 


-20 


Gross hard-currency debt 2 . . 


8.7 


7.7 


8.3 


8.8 


11.8 


15.1 


7.7 


Net hard-currency debt 2 ... 


7.0 


6.6 


6.8 


6.7 


8.6 


12.0 


5.5 



1 In millions of United States dollars. 

2 In billions of United States dollars. 



Source: Based on information from Przemyslaw T. Gajdeczka, "International Market Per- 
ceptions and Economic Performance: Lending to Eastern Europe," Eastern Euro- 
pean Politics and Societies, 2, No. 3, Fall 1988, 10; and Nancy J. Cochrane and Miles J. 
Lampert, Agricultural Performance in Eastern Europe, 1987, Washington, 1988, 566-67. 



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301 



Glossary 



Comecon — Council for Mutual Economic Assistance. Sometimes 
cited as CMEA or CEMA. Members in 1989 included Bul- 
garia, Cuba, Czechoslovakia, the German Democratic Republic 
(East Germany), Hungary, the Mongolian People's Republic 
(Mongolia), Poland, Romania, the Soviet Union, and Viet- 
nam. Its purpose was to further economic cooperation among 
members. 

corvee — Number of days each week that the serf was required to 
work for his lord. 

entail system — Form of inheritance by which land passed to the 
owner's male descendents or, if he had no male heir, to the 
crown. Entail checked Hungary's economic development be- 
cause it prevented the nobles from selling their land or using 
it as collateral to obtain credit. 

forint — National currency of Hungary. As of July 1989, the offi- 
cial exchange rate was 62.28 forints to US$1. 

gross domestic product (GDP) — Includes "transferred value" (cost 
of materials) and "newly created value" (profits and wages). 
"Nonproductive" activities (services) are not included in GDP; 
thus, it is not comparable with the Western concept of gross 
national product (GNP). 

Hofkriegsrat — Central organ for all military matters in the Habs- 
burg lands. 

International Monetary Fund (IMF) — Established along with the 
World Bank (q.v.) in 1945, the IMF is a specialized agency 
affiliated with the United Nations that takes responsibility for 
stabilizing international exchange rates and payments. The 
main business of the IMF is the provision of loans to its mem- 
bers when they experience balance of payments difficulties. 
These loans often carry conditions that require substantial in- 
ternal economic adjustments by the recipients. 

nomenklatura — From the Latin nomenclature. This Russian word 
denotes an enumeration of important positions and the candi- 
dates who are examined, recommended, and assigned to fill 
them by communist party committees at various levels. 

palatine — Originally created in the fifteenth century. Highest office- 
holder in Hungary in the eighteenth century; in theory, the 
commander in chief of the Hungarian armed forces. 

Pannonia — Former Roman province west of the Danube in present- 
day Hungary and northern Yugoslavia. 



303 



Hungary: A Country Study 

Party Rules — HSWP document, which can be altered by the party 
congress. The Party Rules contain sections on regulations for 
admission into the HSWP, the organizational structure of the 
party, the principles of democratic centralism, the role of the 
Basic Organization, the tasks of the party in state and mass 
organizations, and membership dues. 

Petofi Circle — A group formed in 1956 named after the nineteenth- 
century poet and revolutionary Sandor Petofi, who symbolized 
Hungary's desire for freedom. Made up of liberal writers, in- 
tellectuals, and some communists, the circle generated the ideas 
that led to the Revolution of 1956. 

value-added tax — A tax applied to the additional value created at 
a given stage of production and calculated as the difference be- 
tween the product value at that stage and the cost of all materials 
and services purchased as inputs. 

Warsaw Pact — Political-military alliance founded in 1955 as a coun- 
terweight to the North Atlantic Treaty Organization. Mem- 
bers in 1989 included Bulgaria, Czechoslovakia, East Germany, 
Hungary, Poland, Romania, and the Soviet Union. Has served 
as the Soviet Union's primary mechanism for keeping politi- 
cal and military control over Eastern Europe. 

World Bank — Informal name used to designate a group of three 
affiliated international institutions: the International Bank for 
Reconstruction and Development (IBRD), the International 
Development Association (IDA), and the International Finance 
Corporation (IFC). The IBRD, established in 1945, has the 
primary purpose of providing loans to developing countries for 
productive projects. The IDA, a legally separate loan fund 
administered by the staff of the IBRD, was set up in 1960 to 
furnish credits to the poorest developing countries on much eas- 
ier terms than those of conventional IBRD loans. The IFC, 
founded in 1956, supplements the activities of the IBRD 
through loans and assistance designed specifically to encourage 
the growth of productive private enterprises in less-developed 
countries. The president and certain senior members of the 
IBRD hold the same positions in the IFC. The three institu- 
tions are owned by the governments of the countries that sub- 
scribe their capital. To participate in the World Bank group, 
member states must first belong to the IMF {q.v.). 



304 



Index 



Academy of Sciences, 89-90 

Action Program of HSWP, xxxi 

Aczel, Gyorgy, 189 

administrative structure: reform of, 60 

agreements, 153, 154, 216, 238; anti- 
pollution, 115; for cooperation, 150-52, 
215; radio, 205; for Soviet troop with- 
drawal, xlv; to study county financial 
operations, xlvi 

Agricultural and Food Processing Plat- 
form. See Hungarian Socialist Workers' 
Party (HSWP) 

agricultural cooperatives, 128 

agricultural sector (see also farms, collec- 
tive and state): collectivization of, 131- 
32, 157; labor force in, 115-16; perfor- 
mance of, 21-22, 23-24, 29, 57, 142- 
43, 159, 163; price setting for, 122, 
132-33; proposal for land ownership, 
xlii; recollectivized, 55, 120, 158-59; 
small-scale farms in, 133-34 

air force, 244, 248 

airline (MALEV), xlvi, 146 

airport, 146 

Albrecht V (king of Hungary), 13 

alcoholism, 101, 258 

Alliance of Free Democrats, xxxiv, xxxv- 

xxxvii, Hi, xliv, xlix-1 
Allied Control Commission, 47 
aluminum industry, 139-40 
Amnesty International, 105 
Anatolia, 12 
Andrassy, Gyula, 29 
Andrew II (king), 9 
Andrew III (king of Hungary), 1 1 
Antall, Jozsef, 1 
anticommunist forces, 49 
anti-Semitism, 29, 31-32, 38, 42-46 
April Laws, 26-27 

armed forces: conscription and voluntary 

service in, 223; reduction in number of, 

xiv; spending for, xiv, 236 
armistice with Soviet Union, 47 
army: control by Habsburg Hofkriegsrat, 

227; political indoctrination in, 247; 

post- World War II, 230 
Arnulph (king of East Francia), 5 
Aron Marton Association, xxiii 



Arpad, 4 

Arpad Dynasty, 5, 11 
Arrow Cross Party, 44, 46 
Association of Young Pioneers, 91 
Attila Jozsef University, xxxix 
Attila the Hun, 5 

Austria, 27-28, 38; boundary with, xliv- 
xlv, 67, 215, 256; economic assistance 
from, 139; relations with, 205, 215-16; 
Soviet troop withdrawal from (1955), 
238; trade with, 154 

Austrian Alps, 68 

Austrian Empire, 16-28 

Austro- Hungarian Empire, 28 

Avars, 5 

AVO. See State Security Department 

(Allamvedelmi Osztaly: AVO) 
Axis powers. See Italy; Nazi Germany 
Azamos River, 67 

Bakony Mountains, 113 

balance of payments. See current account 

deficit 
Balkans, 12 

Bank for International Settlements, 126 
banking system (see also credit system), 

125; reform in, 126-27 
bankruptcy law, 125, 129 
Baptists, 94 
Bardossy, Laszlo, 45 
Basta, George, 17 
Batthyany, Louis, 26-27 
bauxite industry, 139 
Bela III (king of Hungary), 8 
Bela IV (king of Hungary), 9, 11, 225 
Belgrade, 44, 226 
Belgrade Declaration (1955), 52 
Bern, Jozef, 228 

Berecz, Janos, xlii, 194, 195, 204 

Beria, Lavrenti, 51 

Bethlen, Gabor, 17 

Bethlen, Istvan, 38-40 

Bihari, Mihaly, 178 

birth rate, 71-72 

black market or underground economy, 

137, 148-49 
Bobu, Emil, 212 



305 



Hungary: A Country Study 



Bocskay, Istvan, 17, 226-27 
Bod, Peter Akos, 1 
bonds, 60 

Border Guard, xlv, 223, 253, 255-57 

Borsod-Abauj-Zemplen County, xlvi 

Bosporus Straits, 12 

Bracsok, Istvan, 235 

Britain: relations with, 205-6, 216-17; 

trade with, 216 
Bruszt, Laszlo, xxxvi 
Buda, 15, 16, 25, 28 
Budapest, 65 

budget deficit, xxix, xiv, 1 

Bulgaria, xxx, 12 

Bulgars, 4, 5, 224-25 

Bulgur-Turks, 4, 75 

Bush, George, xlvi 

bus manufacturing industry, 140 



Calvinism, 16, 17, 66 
capitalism, 120 

Carpathian Basin, 4-5, 75, 224-25 
Carpathian Mountains, 4, 225 
Carpatho-Ukraine, 43, 67 
Ceau§escu, Nicolae, xlvii-xlviii, 212, 213, 

240-41 
Celts, 5 

censorship, 106, 203-4, 261-62 
central bank, 124-26 
Central-European International Bank 

(CIB), 126-27 
central planning, 50-51 
Central Statistical Office, 177 
Chamber of Commerce, 136 
Charles Robert (king of Hungary), 11, 

225 

Charles V (Holy Roman Emperor), 15 
Charles VI (Habsburg king), 20-21 
chemical industries, 140-41, 159 
China: relations with, 206, 219; trade 
with, 155 

Chinese Communist Party (CCP), 219 
Christian Democratic People's Party, 

xxxiii, xxxvi, xlix 
Christian National Union, 37, 38-39 
Churchill, Winston, 47 
church schools, 51 
Citibank Budapest, 127, 154 
Civic Democratic Party, 48 
climate, 70 

coal deposits, 68, 112-13 
coal industry, 137-38 



Cold War, 49 

collective farms, xxvii, 51-52, 55, 80 
colonization, 21 

Comecon. See Council for Mutual Eco- 
nomic Assistance (Comecon) 
Cominform, 50 

Committee for Historical Justice, xxvi 

commune elections, 185 

communist government: impact on soci- 
ety of, 65, 104-7; opposition to, 104-7 

Communist Party of Czechoslovakia 
(CPCz), 207 

Communist Party of the Soviet Union 
(CPSU), 188, 189, 209 

Communist Youth League (Kommunista 
Ifjusagi Szovetseg: KISZ), 66, 88-91, 
248 

Compromise of 1867, 28, 29, 32, 34, 37, 
228 

computer industry, 142 
Conference on Security and Coopera- 
tion in Europe (CSCE), 257; Cultural 
Forum of, 212 
conscientious objection, 105 
conscription, xli, 223, 247-48 
Constitution (1949): amendments to, 
xxvii, xliii, 99, 171-74; freedoms enun- 
ciated in, 94-95; mixed ideology in, 
170; provisions of, xxvii, 76, 169, 171- 
73, 260-61 ; role of communist party in, 
xxvii 

constitution, new (1990), 172 
constitution, temporary (1919), 36 
Constitutional Court, xxxvii, liii 
Constitutional Law Council, 170, 173-74 
construction industry, 143, 148 
corvee labor, 22, 26 
Corvina library, 14 

Council for Mutual Economic Assistance 
(Comecon), 51, 206; trade with, 140- 
41, 152-53 

Council of Ministers, 169, 170-72, 
174-75, 234-35; county -level participa- 
tion by, 185-86; Information Bureau 
of, 203; reorganization and role of, xxi, 
xxxvii; role, power, and composition of, 
177; role in economic planning of, 119 

Council of National Salvation Front, Ro- 
mania, xlviii 

councils, district and county, 185 

Counter-Reformation, Roman Catholic, 
16 

counterrevolution, xxx, 37 



306 



Index 



county courts, 187 

court system, 58, 175, 177, 187 

CPSU. See Communist Party of the Soviet 

Union (CPSU) 
Credit Bank of Budapest, 126 
credit system, 127-28 
crime, 257-59 

criminal justice system, 223, 257-62 
Croatia, 8, 16, 23, 38 
Croatians, 21, 22, 26, 28-29, 38, 65, 76 
Croatia-Slavonia, as territory, 27 
Csepel free port, 146 
Cultural Association of Gypsies in Hun- 
gary, 78 

Cultural Association of Hungarian Work- 
ers, 214 

currency, 48; convertibility of, 124; 

devaluation of, 163; nonconvertibility 

of rubles, xlvi 
current account deficit, xxviii-xxix, 150, 

163-64 

Czechoslovakia, 35, 38; boundary with, 
67, 68; economic and political reform 
in, xxx; officer training in, 249; rela- 
tions with, xlvii, 206, 210, 213-14; 
reparations to, 49; trade with, 153; 
Warsaw Pact countries invasion of 
(1968), 58 



Danube Flotilla (HP A), 242 

Danube River, 4, 67, 68, 105-6, 146, 

214, 215 
Daranyi, Kalman, 43-44 
Deak, Ferencz, 27, 29 
debt, external, xxviii, 41, 59-60, 112, 

150, 163 
Decree No. 4 (1985), 261 
Decree No. 40 (1974), 256 
Decree No. 49 (1984), 261 
Decree No. 54 (1957), 238 
defense industries, 236-37 
defense policy, xli, 234, 239 
Demidov, Aleksei A., 238 
Democratic League of Free Trade Unions, 

xxx 

Democratic People's Party {see also Chris- 
tian Democratic People's Party), xxxiii 

Democratic Union of Scientific Workers, 
89-90 

developing country trade, 155 
Diet of Pressburg (1687), 20 
district courts, 187 



divorce, xxix, 65, 87-88 
Dnepr River, 4 

Domestic Trade Law (1986), 135 
Don River, 4 
Dozsa, Gyorgy, 14 
Drava River, 67, 68, 215 
drought, 70 

drug abuse, 101, 258-59 

Dual Monarchy of Austria- Hungary, 28, 

30-31, 34, 35, 228 
Duray, Miklos, 213 



Eastern Orthodox Church, 17, 21 

economic assistance, xlv, 139 

economic performance, xxvii-xxix, 85; un- 
der Gombos administration, 42; under 
New Course policy, 52; under New Eco- 
nomic Mechanism (NEM) policy, 
57-59, 160; Soviet criticism of, 51 

economic policy (see also market economy; 
National Planning Authority): with 
central planning, 120-21, 157-60; New 
Course, 51-52; New Economic Mech- 
anism (NEM), 57-58, 111-12, 118, 
121-22, 134, 160-61; opposition to 
NEM implementation, 58-59; postwar 
reconstruction, 48; proposed reform by 
HSWP for, xxxi-xxxii; recentraliza- 
tion, 161 ; reforms under Kadar regime, 
xxviii, 54-57, 158-64, 207; role of 
Council of Ministers in making, 119, 
169, 170-72, 174-75, 177-78; under 
Soviet regime, 50-53; stabilization pro- 
gram in late 1970s, xxviii, 161-62 

Economic Research Institute, 148 

economic system: with central planning, 
120-34; private sector activity in, 135; 
reform of, 26 

economic work cooperatives (EWCs), 131 

Eden, Anthony, 47 

education, military, 246-51; academies 

for, 231, 249; paramilitary, 251; pre- 

military, 250-51 
educational system: under communist 

government, 96-99; reform in, 32, 33, 

44 

electoral system, xliii-xliv; in communes, 
105; democratic nature of, 174; free 
elections of, xxxv-xxxvii, xlix-1, 37; 
laws (1966, 1970, 1983), 58, 60; for Na- 
tional Assembly, 181, 184-85; reform 
in, 136, 190-91 



307 



Hungary: A Country Study 



electricity generation, 138-39, 214 
emigration, 32, 74 
employment, 115-16 
Endre Bajcsy-Zsilinszky Society, xxxiv, 
xxxvii 

energy industries, 138-39 
energy resources, 112-13, 137-42 
engineering sector, 140-41, 159 
entail system, 11-12, 24, 31 
Entente powers, 3, 35 
environmental concerns, 70, 105-6, 1 14— 
15 

equipment manufacturing, 140-41 
ethnic composition, 38, 74-78 
European Economic Community (EEC), 
153 

exchange rate system, 60; controls for, 
121; unified, 124 

exports: of bauxite, alumina, and alumi- 
num, 139-40; to Comecon countries, 
153; of computer products, 142; per- 
formance of, xxviii-xxix, 152, 163; of 
pharmaceutical products, 141; prin- 
cipal, 23-24, 152; to Soviet Union, 153; 
to Western countries, 149-50; to West 
Germany, 154 

Faluvegi, Lajos, 211 

family constellation, 65, 86 

Farkas, Mihaly, 230-31 

farms: collective or cooperative, 158-59; 

cooperative and state, 55, 132-34, 143; 

small-scale, 133-34, 143 
fascist parties, 44 

Federation of Young Democrats, xxxix, 
xxxv-xxxviii, xlii, xliv, xlix, 107, 253- 
54 

Ferdinand (king of Hungary), 15 

Ferdinand V (ruler of Hungary), 26 

Ferenc Munnich Society, xxxix, 106 

Ferihegy Airport, 146 

feudal economy, 8 

financial instruments, 60, 128-29 

financial sector, 60, 125 

Finno-Ugric people, 3, 74-75 

fiscal policy (see also tax system), 121 

Five-Year Plan: Fourth, 103-4, 160; 

Fifth, 160; Sixth, xxviii, 162; Seventh, 

162-64 
flood control, 68 

food processing industries, 141-42 
foreign policy, 169-70; changes in 1980s 



for, 60; of Gombos administration, 
42-43 
forests, 114 

For the Equality of Chances of the 
Provinces Platform. See Hungarian So- 
cialist Workers' Party (HSWP) 

For the HSWP Platform. See Hungarian 
Socialist Workers' Party (HSWP) 

Four Power Agreement, 216 

Francis I (ruler of Hungary), 23-24, 25 

Franz Ferdinand (archduke), 34 

Franz Joseph (emperor), 19, 26-29, 34 

Freedom Fighters, 232, 233 

freedom of the press, xxxi, 104-7, 261-62 

free port (Csepel), 146 

Frigyes Karikas Military College, 249 

Frunze Military Academy, Soviet Union, 
249 

Fur, Lajos, 1 



Gabcikovo-Nagymaros Dam, xlvii, 

105-6, 139, 214 
gas and petroleum products industry, 138 
gas pipelines, 146-47 
Geczi, Jozsef, xxxix 
General Agreement on Tariffs and Trade 

(GATT), 149 
General Banking and Trust Company, 

126 

geography, 65, 67 
Germans, 5, 9, 21, 26, 65, 76 
Germany (see also Nazi Germany); trade 
with, 149 

Germany, East: economic and political 

reform in, xxx; relations with, xlvii; 

trade with, 153 
Germany, West, 205, 216; trade with, 

154, 216 
Gero, Erno, 53 
Geza (chieftain), 6 
gold, 8, 9, 11-12 
Golden Bull, 9, 11 
Gombos, Gyula, 41-42 
Goncz, Arpad, xlix-1 
Gorbachev, Mikhail S., xlii, 112, 206, 

209, 210, 239 
Gorgei, Artur, 228 

government, district and county, 185-87 
government intervention, 111, 120-21, 

124-25, 150 
Great Plain, 65, 68 
Greek Orthodox, 66, 94 



308 



Index 



Greeks, 65, 76 

Green movement, 105 

Gromyko, Andrei A., 210 

Grosz, Karoly, xxlii, 112, 164, 169, 210, 

213, 214, 218, 240 
Groza, Petru, 49 
Gyorffy, Karoly, 213 
Gyorgy Kilian Technical Air Force 

Academy, 249-50 
Gypsies, 65, 74, 76-78, 257-58 

Habsburg Empire {see also Austrian Em- 
pire; Royal Hungary): deposition of, 
27; disintegration of, 228; invade Tran- 
sylvania, 1 7 ; rulers of, 3 , 11; rules part 
of Hungary, 3, 16, 224 

Hamori, Csaba, 196 

Haraszti, Miklos, 262 

hazardous waste problem, 114 

HCP. See Hungarian Communist Party 
(HCP) 

health care, 66, 99-102 

Helsinki Accords, 257 

hill country, 65 

Hitler, Adolf, 42, 43, 45 

Hofkriegsrat, 227 

Home Defense Sport Federation, 91 
homogeneity of population, 74 
Honved Military College, 249 
Horn, Gyula, xlvii, 1, 239 
Horthy, Miklos (regent), 37-39, 41, 

44-46, 49, 229 
Hortobagy, 67, 68 
Horvath, Balazs, 1 
Horvath, Istvan, 253, 255 
household farming, 133-34 
housing, xxv, 88, 103-4, 143 
HP A. See Hungarian People's Army 

(HPA) 

HSP. See Hungarian Socialist Party (HSP) 
HSWP. See Hungarian Socialist Workers' 

Party (HSWP) 
human rights: in Czechoslovakia, 213-14; 

in Hungary, 218; in Romania, 211-13, 

240; in Yugoslavia, 214 
Hungarian-Austrian Friends Circle, 215- 

16 

Hungarian Autoclub, 91 

Hungarian Communist Party (HCP): 
control of government by, 50; lack of 
support for, 46; organization of, 36; 
power of, xxv, 47-49 



Hungarian Credit Bank, 126 
Hungarian Cultural Institute, Vienna, 
215 

Hungarian Democratic Forum, xxxiii, 

xxxiv, xxxvi-xxxvii, lii, xlix-1, 107 
Hungarian Foreign Trade Bank, 126 
Hungarian Independence Party, xxxii 
Hungarian language, 3-4, 6, 24; compo- 
sition of, 75-76; as official language, 
29, 75 

Hungarian National Bank, 124-27, 129, 
151, 177 

Hungarian National Defense Association 
(Magyar honvedelmi szovetseg: MHSz), 
248, 251 

Hungarian People's Army (HPA): Cen- 
tral Committee of party organization 
of, 237; change in responsibility of, xlv; 
creation of (1948), 230; dual command 
system of, 230; ground and air forces 
of, 223, 241-44; Main Political Ad- 
ministration of, 235; military equip- 
ment of, 242-44; penal battalion of, 
260; purge of, 233; reorganization 
of, 242; role in Revolution of 1956 
of, 232-33; Soviet influence on, 237- 
39 

Hungarian People's Party, xxxiv, xxxvi- 
xxxvii 

Hungarian People's Republic, 3, 50, 172, 

230; end of (1989), xxvii 
Hungarian Red Army, 36-37 
Hungarian Republic (1946), 48 
Hungarians, 38 

Hungarians in Romania, 1-li, 210-11, 
240 

Hungarian Socialist Party (HSP), xxvii, 
xl-lii, xlix; National Presidium of, li; 
National Steering Committee of, li; 
withdrawal from armed forces of, xlv 

Hungarian Socialist Workers' Party 
(HSWP) (see also Hungarian Socialist 
Party (HSP)), 55-56, 66; Action Pro- 
gram of, xxxi; Agricultural and Food 
Processing Platform, xl; Basic Organi- 
zations in, 175, 189, 193, 198-99, 200, 
256; Central Committee of, xxxi, 59, 
195, 200, 234, 237, 257; Central Con- 
trol Committee of, 195-96; constitu- 
tional basis for power of, 172, 175; 
contact with Chinese Communist Party 
of, 219; county and district level par- 
ticipation in, 185-86; defense policy 



309 



Hungary: A Country Study 



responsibility of, 234; democratic 
centralism principle of, 191-92; De- 
partment for Agitation and Propaganda 
of, 203; discipline in, 199-200; dissent 
within, xxxix; For the Equality of 
Chances of the Provinces Platform, xl; 
For the HSWP Platform, xl; intermedi- 
ate institutions of, 198; loses support 
(1989), xxxv-xxxvi; membership in, 
200-202, 235; Party Congress of, 193- 
95; party structure of, 192-93; People's 
Democratic Platform of, xl; Politburo 
of, 118-19, 196-7, 234-35; power mo- 
nopoly of, 60, 118, 136, 169, 174, 188- 
89; Reform Alliance of, xl; role of Patri- 
otic People's Front in, xxxiv-xxxvii; 
Secretariat of, 197-98; sharing of power 
for reform by, xxi, 118-19; Workers' 
Guard of, xlii-xliii, xlii-xliii, 223, 253, 
257; Young People's Platform, xl; 
youth organization of: Communist 
Youth League, 66, 88-91 
Hungarian Soviet Republic (1919), 35- 
36, 46 

Hungarian Telegraph Agency (Magyar 

Tavirati Iroda: MTI), 203 
Hungarian Workers' Party (HWP) (see 

also Hungarian Socialist Workers' 

Party (HSWP)); xxvii, xxviii, 54, 170; 

Administrative Department of, 230; 

control of state by, 3, 50; incipient de- 

Stalinization in, 231 
Hungary as territory, 27 
Hunyadi, Janos, 13, 226 
HWP. See Hungarian Workers' Party 

(HWP) 

hydroelectric power system, 139, 214 



immigration (see also refugees), 9 

import licensing, 150 

imports: of aluminum, 139; from China, 
219; of coal, 138; from Comecon coun- 
tries, 153, 161; of electricity, 138; of 
iron ore, 140; of oil, 138; performance 
of, 163; principal, 152; of raw mate- 
rials, 111-12; from Soviet Union, 153; 
from West Germany, 154 

import substitution, 122, 157 

Imredy, Bela, 44 

independence (1918), 228 

independent contract work associations 
(ICWAs), 131 



Independent Smallholders' Party (see also 
Smallholders' Party); xxxii, xxxiv, 
xxxvi-xxxvii, xlix, 172 

Industrial Cooperatives National Coun- 
cil, 136 

industrial sector: after dismemberment, 
38; in centrally planned economy, 

xxvii, 129-31; competitive prices for, 
122; development under Bethlen re- 
gime of, 39-40; employment in, 116; 
engineering and chemical industries in, 
140-41; expansion in 1970s of, 160-61; 
impact of World War II on, 48; per- 
formance of, xxviii-xxix, 136, 163 

inflation, xxix, 48, 80 

insurance industry, 127 

International Bank for Economic Cooper- 
ation, 126 

International Investment Bank, 126 

International Monetary Fund (IMF): 
loans from, xxix, 162; membership in, 

xxviii, 149; standby credit agreement 
with, 150, 164 

investment: domestic, 55, 128, 160, 163; 

foreign direct, 120 
investment protection agreement, 154 
Ipoly River, 67 
iron deposits, 68 
iron industry, 140 
Israel, xliv-xlii, 206, 218-19 
Italians, 9 
Italy, 42, 44, 228 
Ivanyi, Pal, 191, 196, 197 

Japan, 44; loans from, 163; trade with, 

154-55 
Jasso, Mihaly, 191 
Jelacic, Josip, 26, 228 
Jeszenszky, Geza, 1 

Jewish Emancipation Act (1868), 29, 38 
Jewish Law, 44 

Jews, 9, 21, 29, 38, 65, 66, 76; deporta- 
tion of, 45-46; emancipation of, 29, 32; 
in Hungarian politics, 51; position in 
society of, 31-32, 77, 80; repression in 
Kallay administration, 46; as victims 
of anti-Semitism, 42-46; as victims of 
white terror, 37 

joint ventures, 120, 150-52, 154 

Joseph II (ruler of Hungary), 22-23 

journals, 204-5 

judicial system (see also criminal justice 



310 



Index 



system); components of, 187-88; greater 
independence for, 136; lacks indepen- 
dence, 174-75, 177; military courts in, 
259-60 

Kabar tribe, 5 

Kadar, Janos, xxxv, 46, 210, 217, 219; 
administration of, 3, 46, 50, 53-58, 
112, 158, 164, 233-34; concern for 
repressed Hungarians of, 21 1-12; con- 
solidation of power by, 56; constitu- 
tional changes in regime of, 171; 
economic policies of, 54-57, 158-64, 
207; ouster of, 169; policy toward 
Soviet Union of, 209-10 

Kallay, Miklos, 45 

Kalman I, 8 

Karl IV (emperor), 34-35, 38-39 
Karolyi, Gyula, 41 

Karolyi, Mihaly (The Red Count), 35, 
37, 228 

Karpati, Ferenc, 101, 235, 248 
Kazan', 4 
Khazar tribe, 4 

Khrushchev, Nikita S., 52, 55-57, 237 

Kiraly, Bela, 233 

Klein, Marton, 212 

Kohl, Helmut, 216 

Kopacsi, Sandor, 232 

Korea, South, xlv-xlvi, 206, 219-20 

Kornai, Janos, 131 

Korom, Mihaly, 184 

Kossuth, Lajos, 25, 26-27, 228 

Kovacs, Bela, 49 

Kovacs, Istvan, 171 

Krasznai, Lajos, 235 

Kulin, Ferenc, 203 

Kun, Bela, 35, 36-37, 46 

labor camps, 260 
labor courts, 187 

labor force, 32; composition of, 82; em- 
ployment of, 115; foreign workers in, 
118; mobility of, 117; size of, 42; 
women in, 87, 102, 117-18 

Lajos Kossuth Military Academy, 249 

Lakatos, Geza, 46 

Lake Balaton, 67, 68, 83 

Lake Ferto (Neusiedlersee), 68, 215 

Lake Velence, 67 

Lakos, Sandor, 192 

land for agriculture, 68, 112, 113-14 



land ownership, xxviii, 32, 79, 120, 132 

land reform, 26, 38, 40, 44, 48, 51, 80, 91 

languages: Croatian, 29; German, 27; 
German as official, 22; Hungarian, 
3-4, 6, 24, 26, 33; Hungarian as offi- 
cial, 29, 75; Latin as official, 22, 23; 
Magyar, 22; Russian, 98 

Lazar, Gyorgy, 214 

Laszlo I (king of Hungary), 8 

Laszlo V (king of Hungary), 13 

League of Nations, 39 

legal system, 15, 259 

Lendvai, Paul, 211 

Leopold I (emperor), 19-20 

Leopold II (ruler of Hungary), 23 

Leo VI (emperor), 4 

Liberal Party, 29, 31, 33-34 

lignite, 112-13 

literacy rate, 32, 44 

Little Plain, 68 

local government. See councils, district 

and county; government 
Lomax, Bill, 181 

Louis I (king of Hungary), 11-12 
Louis II (king of Hungary), 15, 226 
Lukacs, Janos, 196, 197 
Lutheran Church, 94, 95 
Lutheranism, 16, 17, 66 



magnate class, 9, 11-15, 21, 23-25, 31 
Magyarization, 33 

Magyars: in Hungary, 21; influences on, 
4; origins of, 3-5, 75, 224; in present- 
day Hungary, 65; as raiders, 5-6, 
224-25; society of, 6, 8 

Maleter, Pal, 232-33 

Malinovskii Military Academy, Soviet 
Union, 249 

Maria Theresa (ruler of Hungary), 21-22 

market economy, xxx, xxxi-xxxii, xxxiii, 
111 

marriage rates, 72 

Marshall Plan, 49-50 

Martenson, Jan, li 

Martinuzzi, George, 15, 17 

Marxist-Leninist ideology: in Constitution, 
170-73; counterrevolution against, xxx; 
in educational system, 96-99; in Hun- 
garian Constitution (1949), 170; in 
Hungarian Socialist Workers' Party 
(HSWP), 189; related to unemploy- 
ment, 116-17 



311 



Hungary: A Country Study 



mass media, 169, 203-5 
mass organizations, 86, 88-91 
Mate Zalka Technical Military Academy, 
249 

Matra Mountains, 67, 113 

Matyas Corvinus (king of Hungary), 

13-14, 226 
Mecs, Imre, xxx 
Mecsek Mountains, 113 
medical care, public and private, 66 
Mehes, Lajos, 211 
Methodists, 94 

Metternich, Klemens von, 26 

MHSz. See Hungarian National Defense 

Association (Magyar honvedelmi 

szovetseg: MHSz) 
migration, 32, 74 

Miklos Zrfnyi Military Academy, 249 
military courts, 187, 259-60 
military sector, xxvii 
Mindszenty, Jozsef (cardinal), 51, 54, 92 
mineral deposits, 68, 113 
mining, 8, 9, 11-12 
Ministry of Agriculture and Food, 121, 
132 

Ministry of Defense, 223; Main Political 
Administration, xlv, 230, 234, 248; 
military industries owned by, 236-37; 
plan for reduction of troops by, 244; re- 
organization of, xlv 
Ministry of Education, 96 
Ministry of Finance, 119, 125 
Ministry of Home Affairs, xlv 
Ministry of Industry, 60, 130-31, 253 
Ministry of Interior, 223, 258 
Ministry of Trade, 119, 150, 155 
minorities, 21; constitutional provisions 

for, 76-77; policy toward, 74 
Mohacs (battle), 15, 226 
Mohi (battle), 9, 225 
monetary policy, 121 
Mongols, 9, 225 
Moravia, 224 
Mormons, 94 

mortality rate, 71-72, 100-101 
Moscow Military Academy of the General 
Staff, 249 

most-favored-nation status, xlii, 154, 218 
mountains, 67, 68 
Mount Kekes, 67 

multiparty system. See political system 
Miinnich, Ferenc, xxxix, 56 
Murad (sultan), 12 



Mur River, 215 
Mussolini, Benito, 42 



Nagy, Ferenc, 48, 49 

Nagy, Ferenc Jozsef, 1 

Nagy, Imre, xxx, 51-54, 158, 232 

Napoleon, 24 

Napoleonic wars, 23, 227 

National Assembly: new election rules 
for, xlii-xliv; new power for, xlii; role, 
power and composition of, 169, 
180-81 ; role in defense spending of, 236 

National Association of Entrepreneurs, 
136 

National Association of Stamp Collectors, 
91 

National Commercial and Credit Bank, 
126 

National Council of Hungarian Women, 
66, 88, 203 

National Council of Trade Unions, Ro- 
mania, 211 

National Council of Trade Unions 
(Szakazervezetek Orszagos Tanacsa: 
SZOT), xxxiv, 89 

National Defense Council, 234 

National Gypsy Council, 78, 203 

National Price Office, 177 

nationalism, 3, 22-23, 60-61, 246-47 

Nationalities Law, 29, 33 

nationalization: in 1919, 36; post- World 
War II, 48, 50 

National Peace Council, 105 

National Peasant Party, 48, 53, 172 

National Planning Authority, 119-21 

National Police, 223, 253, 255 

National Presidium. See Hungarian So- 
cialist Party (HSP) 

National Price Office, 119 

National Reorganization and Liquidation 
Board, 129 

National Savings Bank, 127 

natural gas, 113 

natural resources: distribution of, 111-14, 
149, 157; loss with dismemberment of, 
38 

navigation system, 214 

Nazi Germany: assistance from, 67; in- 
vasion of Yugoslavia by, 44; occupa- 
tion of Hungary by, 45-46; relations 
with, 3, 37, 42-44, 228 

Nemeth, Miklos, xxxi, xlvii, xlix, li, 196 



312 



Index 



New Economic Mechanism (NEM). See 

economic policy 
news media, 203 
newspapers, 204 

North Atlantic Treaty Organization 

(NATO), xli, 206 
Northern Hills, 65, 68 
nuclear power, 139 

Nyers, Rezsd, xxxi, xxix, xli, xlvii, 56, 
59, 195 



officer corps, 231-32, 233; Soviet in- 
fluence on, 237; training for, 248-50 

Ogotai (khan), 9 

oil deposits, 68, 113 

oil pipeline, 146 

oil price shock, xxviii, 160, 161 

Olah, Istvan, 235 

Openness Club, 106 

Opposition Roundtable, xxxiv-xxxviii, 
107 

Otto I (king of Holy Roman Empire), 6 
Otto II (king of Holy Roman Empire), 
6, 225 

Ottoman Empire: central Hungary as 
province of, 16-17; Transylvania as 
part of, 16, 19 

Ottoman Turks, 3, 12, 13, 223-24, 226 



Pacsek, Jozsef, 235 

palatine as ruler, 12, 16 

Pannonia, 224-25 

paramilitary education, 251 

partition of Hungary, 15-17, 19 

Party of Forty-Eight, 34 

Party of Independence, 34, 35 

Party of Unity, 39 

Party of Work, 34 

passport law (1988), 256 

Patent of Toleration, 22, 23 

Patriotic People's Front (PPF), xxxiv, 58, 
169, 172, 174, 181, 184, 189; relation 
to Hungarian Socialist Workers' Party 
(HSWP) of, 202-3 

Peace Group for Dialog (Dialogus), 105 

peace movement, 105 

Peace of Karlowitz, 19 

Peace of Vienna, 1 7 

Peace of Westphalia, 17 

Peace of Zsitvatorok, 17 



peasants, 31, 32, 40, 55, 79-81 

Pecheneg tribe, 4, 225 

Penal Code, 259 

penal system, 260 

penitentiaries, 260 

pension system, 66, 102-3 

People's Control Committee, 174, 178 

People's Democratic Platform. See 

Hungarian Socialist Workers' Party 

(HSWP) 
Peres, Shimon, 219 
Peres de Cuellar, Xavier, li 
Pest, 25, 28 
Petofi Circle, 53 
petrochemical industries, 141 
Petrovszki, Istvan, 192 
pharmaceutical industry, 141 
pipeline system, 146-47 
plains, 65 

Poland: crisis: 1980-81, 237; free elec- 
tions in, xxx ; influence on Hungary of, 
xxviii; Louis I as king of, 12; officer 
training in, 249; trade with, 153 

Political College, 195 

political system: army dual command sys- 
tem, 230; emergence of multiparty sys- 
tem in, xxvii, xxx, xxxvii, 106; 
emergence of parties in, xxxii-xlii, 106; 
HSWP structure in, 192-93; liberali- 
zation of, xxvii-xxviii, xxx, xliv, 60, 
223; parties in 19th century of, 33-34; 
post-World War II, 47-49; reform of, 
26, 262; reform requirement for, 58 

population, 21, 31-32, 65, 70, 110-12; 
composition of, 76; homogeneity of, 74; 
loss in post-war dismemberment of, 38, 
71; in urban areas, 73-74 

ports, 146 

Postal Service, 177 

poverty, xxv, 41, 79, 85, 155, 157 

Pozsgay, Imre, xxxi, xxxvii-1, 195, 202 

PPF. See Patriotic People's Front (PPF) 

Pragmatic Sanction (1723), 20, 37 

Precision Mechanics Enterprise, 236 

president, xxxvii, xliii 

Presidential Council, 169, 174-75; abo- 
lition of, xliii; defense policy responsi- 
bility of, 234; role, power and 
composition of, 178-79 

Presidential Council of the Supreme 
Court, 188 

price system: controls and price- setting in, 
121, 132-33, 163; under New Course 



313 



Hungary: A Country Study 



policy, 52; reforms under New Eco- 
nomic Mechanism, 122-23; restructur- 
ing of, 60; rising prices in, xxlx, 1; for 
small-scale farm output, 134 
private and semi-private enterprises, 131, 
147-48 

private sector, 60, 111, 120, 135-37, 
147-48 

property {see also joint ventures): expropri- 
ation of, xxvii; plan for private and for- 
eign, xxxii, 120 

prosecutor general, 188 

protectionism, 150 

Protestant religions, 16, 66, 93-94 

Public Health Act (1972), 99 

public works program, 117 

purges, 52 

Puspokszilagy, 114 

Raba-Odenburger railroad, 215 

Raba River, 67, 68 

Racz, Barnabas, 185 

Radio Danubius, 205 

radio stations, 205 

railroad system, 146, 215 

rainfall, 70 

Rajk, Laszlo (communist leader during 
the 1930s and 1940s), 46-47, 50, 52 
Rajk, Laszlo (prominent dissident during 

the Kadar era), 184 
Rakoczi, Ferenc, 20, 227 
Rakoczi, Gyorgy, I (prince), 17 
Rakoczi, Gyorgy, II (prince), 19 
Rakosi, Matyas, 3, 47, 49-54, 231 
Rakosi administration, 157-58 
RCP. See Romanian Communist Party 
(RCP) 

rebellion, national (1703-11), 20 

recession (1929), 41 

referendum (1989), xxxviii, xlii 

Reform Alliance. See Hungarian Socialist 
Workers' Party (HSWP) 

Reformation, Protestant {see also Counter- 
Reformation, Roman Catholic), 11, 
16 

reform leaders, 24-25 

Reformed (Calvinist) Church, 94, 95 

refugees: from East Germany, xlvii, 256- 
57; post- World War I, 37; from Roma- 
nia, 76, 212-13 

religion {see also Patent of Toleration), 16, 
17, 66; discrimination against, 29, 



31-32, 42-46, 86; freedom of, 22; 

persecution of Protestants, 17, 19, 20 
Republic of Hungary (1989), xxvii, xliii 
revolt: noblemen, 227; peasant, 12, 14, 20 
revolution (1848), xxx, 19, 26-27, 227-28 
Revolutionary Committee of the Armed 

Forces, 233 
Revolution of 1956, xxx, 46, 53-54, 232, 

237 

Ribanszki, Robert, xxxix 
rights {see also human rights): constitution- 
al, 173, 260-61; to strike, xxx 
rivers, 67, 114 
river transport, 146 
roads, 146, 215 
Roman, Petre, li 

Roman Catholic Church: as ally of mag- 
nates, 31; conversion of Magyars by, 
6; Counter-Reformation of, 16; domi- 
nation by, 32, 96; persecution of, 86, 
91-93; reduction in power of, 32-33, 
91-92; revival of (1980s), 93, 95 

Roman Catholics, 17, 66 

Romania, 35, 38, 44, 49; anti-Hungarian 
violence in, 1-li; boundary with, 67; 
relations with, xlvii-xlviii, li, 206, 210- 
13, 223, 240-41 

Romanian Communist Party (RCP), 211 

Romanians, 5, 17, 21, 22, 26, 37, 38, 65, 
76, 256 

Romanov, Grigorii V., 209 

Romans, 5 

Royal Hungary, 16-17, 19, 226-27 
Rozsik, Gabor, xxxv 
rule of law, xxvii, xlviii 
Russia, 27 



samizdat, 105, 261 
Saxons, 8 

Schmidt, Istvan, 244 
schools, 66 

Security Police, 223, 253, 255 

Serbs, 12, 21, 22, 26, 65, 76 

serfs, 8, 9, 11, 13-15, 21-22, 24; bond- 
age law for, 14-15; Eastern Orthodox 
religion of, 17; growth of population of, 
22 

service sector, 116 
Seventh-Day Adventists, 94, 246 
Shamir, Yitzhak, 219 
Shultz, George P., 218 
Sigismund, 12 



314 



Index 



Simon, Janos, xxxvi 
Sio River, 67 
Slavonia, 38 
Slavs, 4, 5 

Slovakia, 36, 38, 43, 67, 213-14 
Slovaks, 21, 22, 26, 38, 65, 76 
Slovenes, 65, 76 

Small Craftsmen's National Association, 
136 

Small Tradesmen's National Association, 
136 

Smallholders' Party, 37, 39, 48, 49, 53 
Social Democratic Party, xxxiii, xxxiv, 

xxxvi, xlii, 32, 35, 39, 48, 49, 50, 53, 

172 

Social Science Institute, 195 

social structure, 6, 8-9; changes in, 31, 
80-85; impact of World War II and 
communism on, 65-66, 78-80; mobil- 
ity in, 80-81; reform of, 26 

social welfare system (see also public works 
program), 99-102 

software industry, 142 

Solferno (battle), 27 

Southern Group of Forces (SGF) (War- 
saw Pact), 237, 238-39 

Soviet-Hungarian trade agreement, 153 

Soviet Union: assistance from, 35; con- 
trol of Eastern Europe by, 3; control of 
Hungary by, 46, 49; cooperation pro- 
gram with, 210; German invasion of, 
45, 229; influence on HPA of, 237-39; 
liberalization of foreign policy of, xlvi; 
military advisers in Hungary, 230-32; 
military training schools of, 249-50; 
Red Army invades Hungary (1944), 
47; Red Army of, 37, 45-46, 229; re- 
lations with, xlvi, 206, 208-10; repa- 
rations to, 49; role in 1956 Revolution 
of, 53-54, 232-33, 241; support for eco- 
nomic and political reform by, xxxviii; 
trade with, 112, 149-50, 153, 158, 164; 
troops in Hungary, 238; troop with- 
drawal from Hungary, xlv, 223, 239; 
weapon sales of, 236, 243 

Soviet Voluntary Society for Coopera- 
tion with the Army, Air Force and 
Navy (Vsesoiuznoe Dobrovol'noe 
Obshchestvo Sodeistviia Armii, Aviat- 
sii, i Flotu: DOSAAF), 251 

spending, military, 223, 235-36 

Springer, Axel, xxxi 

Stalin, Joseph, xxxii, 3, 47, 49-51, 96, 158 



Stalingrad (battle), 229 

standard of living, 142, 156-57 

State Office for Church Affairs, 95, 177 

State Office for Youth and Sports, 177 

state-owned enterprises, 120; before and 
after reform, 130; competitive pricing 
for products of, 122; domestic trade 
patterns of, 155-56; performance of, 
137; proposal to sell, xxviii; revenues 
and spending of, 124 

State Security Department (Allamvedelmi 
Osztaly: AVO), 232, 255 

State Wage and Labor Office, 177 

steel industry, 140 

Stephen (king of Hungary), 6-8 

stock exchange, 111, 128-29 

Straub, Bruno F., 178 

strikes, xxvi, 136 

Strougal, Lubomfr, 214 

Sublime Porte, 17 

subsidies, xxviii, 31, 133, 160 

suicide rate, 101 

Suleyman the Magnificent (sultan), 3,15, 
19 

sulfur-dioxide emissions, 114-15 
Supreme Court, xlii, 175, 177, 187-88, 

260 
swamps, 68 
Sylvester II (pope), 6 
Szabo, Istvan, 196 
Szalasi, Ferenc, 46 
Szechenyi, Istvan, 24-25, 26 
Szekel tribe, 8, 12 
Szekely, Janos, 256 
Sztojay, Dome, 45-46 
Szuros, Matyas, xxvii, 207-8 



Tamerlane, 12 
tax system, 121, 123-24, 151 
Teleki, Pal, 38, 44 
telephone system, 147 
television, 147, 205 

territories: division into, 27; regained, 
42-43 

textile industry, 141 

Thatcher, Margaret, 217 

thermal power stations, 138 

third economy. See black market or under- 
ground economy 

Thirty Years' War, 17 

Thokoly, Imre, 19 

Tildy, Zoltan, 48 



315 



Hungary: A Country Study 



Tirgu Mure§, 1-li 

Tisza, Istvan, 34-35 

Tisza, Kalman, 29, 31-34 

Tisza River, 4, 67, 68 

Tito, Josip Broz, 50 

Tokes, Laszlo, xlviii 

tourism, 152 

trade, domestic, 155-56 

trade, international: government inter- 
vention in, 150-51; with Western coun- 
tries, 149-52, 153-54 

trade barriers, 150 

trade policy: agreement with Germany, 42; 
dollar- account agreement with Soviet 
Union for, xlvi; under Kadar regime, 57, 
60; liberalization of, xxxii; reform of, 60 

trade unions, 32, 39, 50-51, 60, 66, 
88-90, 136 

Transdanube, 65, 68 

transportation system, 143, 146-47 

Transylvania, 5, 8, 38, 43; incorporation 
into Hungary of, 26; ruled by Ottoman 
Empire, 16-19; as separate from Hun- 
gary, 20, 225; as territory, 27 

Treaty of Eternal Friendship (1940), 44 

Treaty of Friendship and Cooperation 
(1984), xlviii 

Treaty of Paris (1947), 49 

Treaty of Szatmar, 20, 227 

Treaty of Trianon (1920) (see also Tria- 
non Hungary), 38, 39, 42, 67, 228 

Treaty of Vasvar, 19 

Trianon Hungary, 228-29 

Tripartite Pact (1940), 44 

Tripartitum of 1514, 15, 259 

Turks (see also Ottoman Turks), 11, 12, 
15-17 



Ulaszlo I (king of Hungary), 13 
Ulaszlo II (king of Hungary), 14-15 
underemployment, 115-17 
unemployment, 116-17 
Uniates (Catholics of the Eastern Rite), 

66, 94, 95 
Unicbank, 127 

uniforms, ranks, insignias, 230, 251-53 

Union of Three Nations, 12, 17 

Unitarians, 17, 94, 95 

United Nations (UN): Convention on 
Long-Range Transboundary Air Pol- 
lution, 114; Human Rights Commis- 
sion of, li 



United States: relations with, xlvi, 205-6, 
217-18; trade agreement with, 154; 
trade with, 154 

United States Peace Corps, xlvi 

universities: under communist regime, 
98-99; establishment of, 12, 14 

University of Pittsburgh, xlvi 

Ural Mountains, 4, 75 

uranium deposits, 139 

Urbarium (see also serfs), 22 



Varpalota Basin, 113 
Vertes Mountains, 113 
videocassette recorders (VCRs), 205 
Vienna, 227-28 
viticulture, 68 
Vojvodina, 27, 38, 43 
Volga River, 4, 75 
Volgyes, Ivan, 230, 233, 241 
Voroshilov, Kliment, 47-48 
Voroshilov General Staff Military Acad- 
emy, Moscow, 249 

wage policy, 123 
wages, xxix 

Warsaw Pact, 54; armed forces commit- 
ment to, 223-24, 234; reform element 
in, xxv ; role in, xlv, 239-40; Southern 
Group of Forces, 237; withdraws from, 
233 

Warsaw Pact countries, 206 

wastelands, 68 

weapons acquisition, 236 

Werboczy, Stephen, 15, 259 

white terror, 37, 39, 46 

Wladyslaw III (king of Poland), 13 

women: in armed forces, 223; in Hungar- 
ian Socialist Workers' Party (HSWP), 
201; in labor force, 87, 102, 117-18; 
status in social structure, 87, 90 

Workers' Guard. See Hungarian Socialist 
Workers' Party (HSWP) 

World Bank (see also Unicbank): Interna- 
tional Finance Corporation and Inter- 
national Development Association of, 
127, 155; loans for pollution control, 
115; loans from, 162; membership in, 
xxviii, 149 

World Health Organization, 100 

World War I (see also Entente powers), 3, 
28; impact of, 34-35, 71, 228 



316 



Index 



World War II, 48, 65, 78 
Writers' Association, 52-53 



214; reparations to, 49; treaty with. 
44 



Young People's Platform. See Hungarian 
Socialist Workers' Party (HSWP) 

Yugoslavia, 35, 38; boundary with, xliv- 
xlv, 67, 68, 256; expelled from Comin- 
form, 50; relations with, 206, 210, 



Zala County, 68 

Zapolyai, Janos (king of Hungary), 15 
Zhao Ziyang, 219 
Zhukov Air Defense Academy, 249 
Zrinyi, Miklos, 226 



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